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61ST CONGRESS \
2d Session
J

/

DOCUMENT

\

SENATE

N o . 353

NATIONAL MONETARY COMMISSION

Digest of

State Banking Statutes
COMPILED BY

SAMUEL A. W E L L D O N
Of the New York Bar

Presented by Mr. A L D R I C H , from the Monetary Commission
F E B R U A R Y 8,1910.—Ordered to be printed

Washington




:

:

:

Government P r i n t i n g Office

:

:

:

1910

NATIONAL MONETARY COMMISSION

NELSON W. ALDRICH, Rhode Island, Chairman.
EDWARD B . VREELAND, New York, Vice-Chairman.
JUL,IUS C. BURROWS, Michigan.

J E S S E OVERSTREET, Indiana.

E U G E N E H A L E , Maine.

J O H N W, W E E K S , Massachusetts.

PHILANDER C. K N O X , Pennsylvania.

ROBERT W BONYNGE, Colorado.

THEODORE E . BURTON, Ohio.

SYLVESTER C. SMITH, California.

JOHN W . DANIEL, Virginia.

LEMUEL P . PADGETT, Tennessee.

HENRY M. TELLER, Colorado.

GEORGE P . BURGESS, Texas.

HERNANDO D . MONEY, Mississippi.

ARSENE P . P U J O , Louisiana.

JOSEPH W . BAILEY, Texas.

ARTHUR B . SHELTON, Secretary.




A. PIATT ANDREW, Special Assistant to Commission.
2

CONTENTS.
Page.
33

INTRODUCTORY
TABLE

A.—TABULAR SUMMARY FOR BANKS.
B . — T A B U L A R SUMMARY FOR SAVINGS BANKS.
C.—TABULAR SUMMARY FOR T R U S T COMPANIES.

ALABAMA:

Introductory
General provisions—
I.—Terms of incorporation
II.—Liability of stockholders
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized banking
XL—Penalties
Trust companies—
I.—Terms of incorporation
III.—Supervision
X.—Unauthorized trust company business

41
42
42
42
43
43
44
44
45
45
45
46
46
46

ARIZONA:

Introductory
Banks—
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VIII.—Branches
X.—Unauthorized banking
XL—Penalties
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.




3

47
48
49
50
51
51
51
52
52
52
53
54

National

Monetary

Commission

ARIZONA—Continued.

Page.

Savings banks—Continued.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
VIIL—Branches
X.—Unauthorized banking
XL—Penalties
ARKANSAS

54
54
55
55
56
56
57
57
58

CALIFORNIA :

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
'
VII.—Overdrafts
VIIL—Branches
X.—Unauthorized banking
XL—Penalties
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Examinations
IV.—Reserve requirements
V.—Discount, loan, deposit restrictions, etc
VI.—Investments
X.—Unauthorized banking
XL—Penalties
Trust companies—
I.—Terms of incorporation
III.—Supervision
Reports
VI.—Investments
X.—Unauthorized trust company business
XL—Penalties




4

60
62
63
6$
65
67
68
69
71
72
72
72
73
75
76
76
76
76
77
79
80
80
81
81
81
82
82
82

Digest

of State

Banking

Statutes

COLORADO :

Page.

Introductory
General provisions—
I.—Terms of incorporation
II.—Inabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
VIIL—Branches
X.—Unauthorized banking
XI.—Penalties
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of directors
III.—Supervision
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of directors
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized banking
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directorsV.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized trust company business

83
84
84
84
86
86
87
87
88
88
88
88
90
90
90
91
91
91
92
92
92
92
93
93
93
94
94
64
95

CONNECTICUT:

Introductory
Banks and trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions




5

96
97
97
97
98
99
100
100

National

Monetary

Commission

CONNECTICUT—Continued.
Banks and trust companies—Continued.
VI.—Investments
VIII.—Branches
X.—Unauthorized banking
XI.—Penalties
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of directors
III.—Supervision
Reports
Examinations
V.—Discount, loan, and deposit restrictions
VI.—Investments
XI.—Penalties

Page.
101
102
102
102
103
103
103
104
104
105
105
106

DELAWARE:

Introductory
General provisions—
I.—Terms of incorporation
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
VII.—Overdrafts
VIII.—Branches
X.—Unauthorized banking
XI.—Penalties

108
108
108
109
no
no
in
in
in
in

DISTRICT OF COLUMBIA:

Introductory
Savings Banks—
III.—Supervision
Reports
Examinations
XI.—Penalties
Trust Companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
VI.—Investments
X.—Unauthorized trust company business
XI.—Penalties




6

113
114
114
114
115
115
116
116
117
117
117
118
118

Digest

of State

Banking

Statutes

FLORIDA:

Page.

Introductory
General provisions—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VIII.—Branches
_
X.—Unauthorized banking
XI.—Penalties
Savings banks—
I.—Terms of incorporation
III.—Supervision, examinations
V.—Discount, loan, and deposit restrictions
VI.—Investments
XI.—Penalties

119
120
121
121
122
123
124
124
124
125
125
125
125
126
126
126
128

GEORGIA :

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VIII.—Branches
XI.—Penalties
Savings banks
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directorsIII.—Supervision
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
XI.—Penalties




7

129
130
130
131
132
133
133
134
134
134
135
136
136
137
137
137
138
138
138

National

Monetary

Commission

IDAHO :

Page.

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
XL—Penalties
Savings banks—
VI.—Investments
Trust companies—
I.—Terms of incorporation
VI.—Investments

139
140
141
141
141
142
143
143
143
144
144
145
145

ILLINOIS :

Introductory
Banks—
I.—Terms of incorporation
.
II.—Liabilities and duties of stockholders and directors,
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
XL—Penalties
Savings banks
Trust companies—
III.—Supervision
Reports
Examinations
V.—Discount, loan, and deposit restrictions
XL—Penalties

146
147
147
148
148
149
149
149
150
150
150
151
152
152
152

INDIANA:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—investments




8

153
153
154
154
155
155
156
156

Digest

of State

Banking

Statutes

INDIANA—Continued.
Page.
B anks—Continued.
VII.—Overdrafts
156
VIII.—Branches
156
XI.—Penalties
156
Private banks
157
Savings banks—
I.—Terms of incorporation
158
II.—Liabilities and duties of trustees
159
III.—Supervision
160
Reports
161
Examinations
161
IV.—Reserve requirements
162
V.—Discount, loan, and deposit restrictions
162
VI.—Investments
163
XL—Penalties
164
Trust companies—
I.—Terms of incorporation
164
II.—Liabilities and duties of stockholders and directors.
165
III.—Supervision
165
Reports
165
Examinations
166
V.—Discount and loan restrictions
166
VI.—Investments
166
VII.—Overdrafts
166
X.—Unauthorized banking
166
XL—Penalties
167
IOWA:

Introductory
General provisions applicable to banks and savings banks—
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
X.—Unauthorized banking
XL—Penalties
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
IV.—Reserve requirements
X.—Unauthorized banking
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.




9

168
169
169
170
171
172
172
173
174
174
174
175
175
176

National

Monetary

Commission

IOWA—Continued.
Savings banks—Continued.
III.—Supervision, examinations
IV.—Reserve requirements
V.—Discount, loan, and deposit restrictions
VI.—Investments
X.—Unauthorized banking
Trust companies

Page.
176
176
177
177
178
178

KANSAS:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount, loan, and deposit restrictions
VI.—Investments
VII.—Overdrafts
X.—Unauthorized banking
XL—Penalties
XII.—Depositors' guaranty system
Savings banks
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized trust company business
XL—Penalties

179
180
181
181
183
184
185
185
186
187
187
187
189
193
194
194
195
195
195
195
196
196

KENTUCKY:

Introductory
Banks and savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized banking
XI.—Penalties




10

197
197
198
199
200
200
200
201
201
201

Digest

of State

Banking

Statutes

KENTUCKY—Continued.
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders
III.—Supervision
Reports
V.—Discount and loan restrictions
VI.—Investments
XL—Penalties

Page.
202
202
203
203
203
204
204

LOUISIANA:

Introductory
Banks, savings banks,, and trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors,
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
VIII.—Branches
X.—Unauthorized banking
XL—Penalties

205
206
207
208
210
211
212
213
213
214
215
215
215

MAINE:

Introductory _
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of trustees
III.—Supervision
Reports
Examinations
V.—Discount, loan, and deposit restrictions
VI.—Investments
X.—Unauthorized banking
XL—Penalties
Trust and banking companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions




11

218
219
220
221
222
223
223
224
227
227
229
229
230
231
232
232
233

National

Monetary

Commission

MAINE—Continued.
Trust and banking companies—Continued.
VI.—Investments
VIII.—Branches
X.—Unauthorized trust company business
XL—Penalties

Page.
234
234
234
235

MARYLAND:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
XL—Penalties
Savings banks—
Terms of incorporation
Reports and examinations
Loans
Penalties
Trust companies—
Stockholders' liability
Supervision
Reports
Examinations
Loans, deposits, and investments

236
237
238
238
239
239
240
240
240
241
241
242
242
243
243
244
244
245

MASSACHUSETTS:

Introductory
Banks—
I.—Terms of incorporation
1_
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VIII.—Branches
IX.—Occupation of the same building
X.—Unauthorized banking
XL—Penalties




12

246
247
248
249
251
252
253
254
255
255
255
256
256

Digest

of State

Banking

Statutes

MASSACHUSETTS—Continued.

Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of trustees
III.—Supervision
Reports
Examinations
V.—Discount, loan, and deposit restrictions
.
VI.—Investments
VIII.—Branches
IX.—Occupation of the same building
X.—Unauthorized banking
XL—Penalties
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors_
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VIIL—Branches
IX.—Occupation of the same building
X.—Unauthorized trust company business
XL—Penalties

Page.
257
259
260
261
263
263
264
272
272
273
273
274
276
276
277
279
280
281
282
283
283
283
284

MICHIGAN :

Introductory
Banks and savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount, loan, and deposit restrictions
VI.—Investments
VII.—Overdrafts
VIIL—Branches
X.—Unauthorized banking
XL—Penalties
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.




*3

285
286
287
288
290
291
291
292
293
296
296
267
297
299
300

National

Monetary

M ICHIGAN—Continued.
Trust companies—Continued.
III.—Supervisio n
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
XI.—Penalties

Commission

_^

Page.
300
301
302
302
302
302
303

MINNESOTA:

Introductory
General provisions—
II.—Liabilities and duties of directors
III.—Supervision
Reports
Examinations
VII.—Overdrafts
XI.—Penalties
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directorsIII.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized banking
XI.—Penalties
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of trustees
III.—Supervision
Reports
Examinations
V.—Discount, loan, and deposit restrictions
VI.—Investments
X.—Unauthorized banking
XI.—Penalties
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of directors
III.—Supervision
Reports
V.—Discount and loan restrictions




14

305
306
306
308
309
309
310
311
312
312
313
313
313
313
314
314
314
315
315
316
316
316
317
317
319
319
319
320
320
320
321

Digest

of State

Banking

Statutes

MINNESOTA—Continued.
Trust companies—Continued.
VI.—Investments
VII.—Overdrafts
X.—Unauthorized trust company business
XI.—Penalties

Page.
321
321
321
321

MISSISSIPPI:

Introductory
General provisions—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
VIII.—Branches
_
X.—Unauthorized banking
XI.—Penalties

322
322
323
323
323
324
324
324
324
325
325

MISSOURI:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
_ _
IV.—Reserve requirements
V.—Discount and loan restrictions
_
VI.—Investments
VII.—Overdrafts
VIII.—Branches
X.—Unauthorized banking
XI.—Penalties
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount, loan, and deposit restrictions
VI.—Investments
XI.—Penalties




15

326
327
328
329
330
332
332
2>2>3
2>33
334
334
334
334
335
337
338
338
339
339
340
340
342

National

Monetary

Commission

MISSOURI—
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
XI.—Penalties

Page.
342
343
344
344
344
345
345
'345
345
346

MONTANA:#

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
•
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized banking
XI.—Penalties
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
X.—Unauthorized banking
XI.—Penalties
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized trust company business
XI.—Penalties




16

347
348
349
350
351
351
352
352
353
354
354
356
356
357
358
358
358
359
359
359
359
360
361
362
362
362
363
363

Digest

of State

Banking

Statutes

NEBRASKA :

Page#

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
Y.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
X.—Unauthorized banking
XI.—Penalties
XII.—Depositors' guaranty system
Savings banks—
Capital
Directors
Reserves
Loans and investments
Penalties
Trust companies

364
365
366
366
368
369
370
370
371
372
372
373
374
377
377
377
378
379
379

NEVADA:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
VIII.—Branches
X.—Unauthorized banking
XL—Penalties
Savings banks
Trust companies

380
381
382
383
385
385
386
386
387
388
389
389
389
391
392

N E W HAMPSHIRE:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.

S. Doc. 353, 61-2




2

17

393
393
394

National

Monetary

Commission

N E W HAMPSHIRE—Continued.
Banks—Continued
Page.
III.—Supervision
395
Reports
396
Examinations
397
V.—Discount and loan restrictions
397
VI.—Investments
398
X.—Unauthorized banking
398
XI.—Penalties
398
Savings banks—
I.—Terms of incorporation
399
II.—Liabilities and duties of stockholders and directors.
401
III.—Supervision
401
Reports
402
Examinations
403
V.—Discount and loan restrictions
404
VI.—Investments
404
IX.—Occupation of the same building
409
X.—Unauthorized banking
409
XI.—Penalties
409
Trust companies—
I.—Terms of incorporation
411
II.—Liabilities and duties of stockholders and directors,
411
III.—Supervision
412
V.—Discount and loan restrictions
412
VI.—Investments
412
XL—Penalties
413
NEW

JERSEY:

Introductory
Banks—
I.—Terms of incorporation
__
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
_
VI.—Investments
VII.—Overdrafts
_
X.—Unauthorized banking
XI.—Penalties
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of managers




18

414
414
415
415
417
417
417
418
418
419
419
419
420
421

Digest

of State

Banking

Statutes

N E W JERSEY—Continued.
Savings banks—Continued.
Page.
III.—Supervision
_
_
____
421
Reports
422
Examinations
424
V.—Discount, loan, and deposit restrictions
424
VI.—Investments
__
425
X.—Unauthorized banking
_
427
XI.—Penalties
427
Trust companies—
I.—Terms of incorporation
428
II.—Liabilities and duties of stockholders and directors428
III.—Supervision
_ __
429
Reports
_ .__
430
Examinations
430
IV.—Reserve requirements
_ __
431
V.—Discount and loan restrictions
431
VI.—Investments
432
VII.—Overdrafts
432
X.—Unauthorized trust company business
432
XL—Penalties
432
NEW

MEXICO:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directorsIII.—Supervision
__
_
Reports
_
__
Examinations
V.—Discount and loan restrictions
VI.—Investments
VIII.—Branches
X.—Unauthorized banking
XL—Penalties
_
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors,
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI —Investments
VIII.—Branches
!
XL—Penalties




19

434
435
436
437
437
438
439
440
440
441
441
442
443
443
444
445
446
447
448
448

National

Monetary

Commission

N K W MEXICO—Continued.
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
•
VI.—Investments
VIII.—Branches
"
XL—Penalties
NEW

Page.
449
450
450
452
453
454
454
455
455
455

YORK:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
VIII.—Branches
IX.—Occupation of the same building
X.—Unauthorized banking
XL—Penalties
Savings banks—
I.—Terms of incorporation
•
II.—Liabilities and duties of trustees
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Deposit, discount, and loan restrictions
VI.—Investments
VIII.—Branches
IX.—Occupation of the same building
X.—Unauthorized banking
XL—Penalties
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors. _




20

457
457
458
459
460
462
463
463
466
466
466
467
467
468
470
470
471
471
473
473
474
474
479
479
479
479
480
480

Digest

of State

Banking

Statutes

N E W YORK—Continued.
Trust companies—Continued.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
_
•
VII.—Overdrafts
VIII.—Branches
IX.—Occupation of the same building
X.—Unauthorized trust company business
XL—Penalties

Page.
481
482
482
483
484
485
485
485
486
486
486

N O R T H CAROLINA:

Introductory
Banks, savings banks, and trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors_
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
XL—Penalties

487
488
488
489
490
491
491
492
492
493

NORTH DAKOTA:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
X.—Unauthorized banking
XL—Penalties
Savings banks
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
.




21

494
495
495
496
497
498
499
499
500
500
501
501
502
502
503
503
504
504

National

Monetary

Commission

NORTH DAKOTA—Continued.

Trust companies—Continued.
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts

Page.
504
504
505

OHIO :

Introductory
General provisions—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
X.—Unauthorized banking
XL—Penalties
Banks—
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
Savings banks—
IV.—Reserve requirements
V.—Discount, loan, and deposit restrictions
VI.—Investments
Trust companies—
I.—Terms of incorporation
III.—Supervision
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments

506
507
508
508
510
510
511
511
512
512
512
513
513
514
515
515
516
517
517
517
517
518
518

OKLAHOMA :

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount, loan, and deposit restrictions
VI.—Investments




22

519
520
521
521
522
523
524
525
526

Digest

of State

Banking

Statutes

OKLAHOMA—Continued.
Banks—Continued.
VII.—Overdrafts
X.—Unauthorized banking
XL—Penalties
XII.—Depositors' guaranty system
Savings banks
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
X.—Unauthorized banking
XL—Penalties
XII.—Depositors' guaranty system

Page.
526
526
527
528
530
531
532
532
533
533
534
534
535
535
535
535

OREGON:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VIII.—Branches
X.—Unauthorized banking
XL—Penalties
Savings banks
Trust companies

536
537
538
538
539
540
541
541
542
542
542
543
544
544

PENNSYLVANIA:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors _
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions




23

545
546
548
550
552
554
555
556

National

Monetary

Commission

PENNSYLVANIA—Continued.

Banks—Continued.
VI.—Investments
VIII.—Branches
X.—Unauthorized banking
XI.—Penalties
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and trustees.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount, loan, and deposit restrictions
VI.—Investments
X.—Unauthorized banking
XI.—Penalties
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized trust company business
XI.—Penalties

Page.
558
56°
560
560
563
564
565
567
568
569
569
569
571
571
572
573
573
573
574
574
574
575

R H O D E ISLAND:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount, loan, and deposit restrictions
VI.—Investments
VII.—Overdrafts
VIII.—Branches
X.—Unauthorized banking
XI.—Penalties
Savings banks—
I.—Terms of incorporation
_
II.—Liabilities and duties of trustees
_




24

576
576
576
577
578
579
580
581
582
582
583
583
583
584
585

Digest

of State

Banking

Statutes

R H O D E ISLAND—Continued.

Savings banks—Continued.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
VIII.—Branches
X.—Unauthorized banking
XL—Penalties
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors_
III.—Supervision
IV.—Reserve requirements
V.—Discount, loan, and deposit restrictions
VI.—Investments
VII.—Overdrafts

Page,
585
586
587
588
588
594
594
594
595
595
595
595
596
596
596

SOUTH CAROLINA:

Introductory
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
XL—Penalties

597
597
597
598
598
599
599
599
600

SOUTH DAKOTA:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount, loan and deposit restrictions
VI.—Investments
VIL—Overdrafts
VIII.—Branches
X.—Unauthorized banking
XL—Penalties
XII.—Depositors' guaranty system
Savings banks




25

601
602
603
605
607
608
609
609
610
611
611
612
612
614
617

National

M on et ar y

Commission

SOUTH DAKOTA—Continued.

Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors,
III.—Supervision
~
_
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized trust company business
XL—Penalties
XII.—Depositors' guaranty system

Page.
617
617
618
618
619
619
620
620
620
621
621

TENNESSEE:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
VIII.—Branches
X.—Unauthorized banking
XL—Penalties
Savings banks—
I.—Terms of incorporation
III.—Supervision
Reports
Examinations
V.—Discount, loan, and deposit restrictions
VI.—Investments
XL—Penalties

622
623
623
624
624
625
625
626
626
626
626
627
628
628
628
628
628

TEXAS:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments




26

629
629
631
632
635
636
636
637
638

Digest

of State

Banking

Statutes

TEXAS—Continued.
Banks—Continued.
Page.
VII.—Overdrafts
640
VIII.—Branches
•
640
X.—Unauthorized banking
640
XL—Penalties
641
XII.—Depositors' guaranty system
643
Savings banks—
I.—Terms of incorporation
648
II.—Liabilities and duties of stockholders and directors.
649
III.—Supervision
650
Reports
651
Examinations
651
IV.—Reserve requirements
652
V.—Discount, loan, and deposit restrictions
65 2
VI.—Investments
653
VIII.—Branches
653
X.—Unauthorized banking
654
XL—Penalties
654
Trust companies—
I.—Terms of incorporation
654
II.—Liabilities and duties of stockholders and directors.
654
III.—Supervision
655
IV.—Reserve requirements
655
V.—Discount and loan restrictions
65 5
VI.—Investments
656
VII.—Overdrafts
656
VIII.—Branches
656
X.—Unauthorized trust company business
656
XL—Penalties
656
XII.—Depositors' guaranty system
656
UTAH:

Introductory
Banks and savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
XL—Penalties
Private bankers
—




27

657
658
658
658
659
660
660
660
661
661
662

National

Monetary

Commission

UTAH—Continued.
Trust companies—
Page.
I.—Terms of incorporation
662
II.—Liabilities and duties of stockholders and directors.
662
III.—Supervision
662
V.—Discount and loan restrictions
662
VI.—Investments
662
VERMONT:

Introductory
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of trustees
III.—Supervision
Reports
Examinations
V.—Discount, loan, and deposit restrictions
VI.—Investments
IX.—Occupation of the same building
XI.—Penalties
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors,
III.—Supervision
V.—Discount and loan restrictions
VI.—Investments
IX.—Occupation of the same building
XI.—Penalties

663
664
665
666
667
669
670
671
673
673
673
674
674
675
675
676
676

VIRGINIA:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized banking
XI.—Penalties
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of directors
III.—Supervision
V.—Discount and loan restrictions
VI.—Investments
XL—Penalties




28

677
678
678
679
679
680
680
680
681
681
681
682
682
682
683
683

Digest

of State

Banking

Statutes

VIRGINIA—Continued.
Trust companies—
I.—Terms of incorporation
III.—Supervision
Reports
XL—Penalties

Page.
683
684
684
685

WASHINGTON:

Introductory
Banks—
I.—Terms of incorporation
.
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VIII.—Branches
X.—Unauthorized banking
XL—Penalties
Savings banks—
I.—Terms of incorporation
III.—Supervision, reports
XL—Penalties
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized trust company business
XL—Penalties

686
687
689
689
691
691
692
692
692
693
693
693
694
695
695
695
696
696
697
698
698
698
698
699

WEST VIRGINIA:

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments




29

700
701
702
702
703
704
705
705
705

National

Monetary

Commission

W E S T VIRGINIA—Continued.

Banks—Continued.
VII.—Overdrafts
X.—Unauthorized banking
XI.—Penalties
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of members and directors
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized banking
XL—Penalties
Trust companies—
I.—Terms of incorporation
III.—Supervision
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
X.—Unauthorized banking
XL—Penalties

Page.
706
706
706
707
708
708
709
709
710
710
711
711
712
712
712
712
713
713
713

WISCONSIN :

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
VIII.—Branches
IX.—Occupation of the same building
X.—Unauthorized banking
XL—Penalties
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of trustees
III.—Supervision
IV.—Reserve requirements
V.—Discount, loan, and deposit restrictions




30

714
715
716
717
719
720
720
720
721
722
722
722
722
723
724
725
725
726
726

Digest

of State

Banking

Statutes

WISCONSIN—Continued.
Savings banks—Continued.
VI.—Investments
IX.—Occupation of the same building
XL—Penalties
Trust companies—
I.—Terms of incorporation
III.—Supervision
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
VII.—Overdrafts
VIII.—Branches
X.—Unauthorized trust-company business

Page.
726
727
727
727
728
728
729
729
730
730
730

WYOMING :

Introductory
Banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
Reports
Examinations
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized banking
XL—Penalties
Savings banks—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors.
III.—Supervision
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized banking
XL—Penalties
Trust companies—
I.—Terms of incorporation
II.—Liabilities and duties of stockholders and directors_
III.—Supervision
Reports
Examinations
IV.—Reserve requirements
V.—Discount and loan restrictions
VI.—Investments
X.—Unauthorized trust-company business
XL—Penalties--




3i

731
731
732
733
733
734
735
736
737
737
738
739
739
740
740
741
741
742
742
743
743
743
744
744
744
745
746
746




INTRODUCTORY.

This digest of banking laws, covering the forty-six
States, the District of Columbia, and the Territories of
Arizona and New Mexico, is a digest only of statutes.
Doubts as to the application or interpretation of statutes
might in a few instances be resolved by investigating
decided cases, but the greater volume of a digest including such material, and the infinitely greater labor
required to prepare it, forbade any excursion into the
decisions. It is true also that whereas the language of
a statute may be safely condensed, briefly stating the
point of law adjudicated in a particular case is a
hazardous business.
Another matter which must be borne in mind in reading
the digest is that the volume of the legislation covered by
it made condensation constantly a point of the greatest
importance. The statutes of each State are, whenever
possible, divided under the three heads, Banks, Savings
banks, and Trust companies; sometimes when space may
be saved by combining (under such heads as General
Provisions, Banks and trust companies, Banks and savings banks, etc.) material which applies to more than one
of the three classes, such an arrangement has been adopted.
Under each of the heads, twelve subheads appear (I.
Terms of incorporation—including capital, dividends, surplus, etc.; II. Liabilities and duties of stockholders and
S. Doc. 3 53, 61-2




3

33

National

Monetary

Commission

directors; I I I . Supervision, including* reports and examinations; IV. Reserve requirements; V. Discount, Loan,
and sometimes Deposit restrictions; VI. Investments;
V I I . Overdrafts; V I I I . Branches; I X . Occupation of the
same building; X. Unauthorized banking, Savings banking, or Trust company business; X L Penalties; a n d X I I .
Depositors' G u a r a n t y System); under these heads are
given only the most important points in the statutes
bearing upon the subject under consideration. So m a n y
minor provisions, therefore, are omitted, and t h e language of those which are inserted has been so abbreviated
and popularized, t h a t a lawyer investigating t h e statutes
of a particular State to determine the course of conduct
of a particular client engaged in banking might find t h e
digest serviceable merely by way of finding his citations
for him—the particular statute on which each statem e n t in t h e digest is based being cited in parenthesis
after the statement. The language of the digest, too, is
made, so far as possible, simple and untechnical, since the
purpose is to present an easily intelligible comparative
s t a t e m e n t of t h e statutes, not a legal text-book.
Since t h e digest is one of banking and not general corporation statutes, the general corporation laws of the
particular States have been gone into only when they were
peculiarly accessible or the banking statutes left blanks
likely to be readily supplied. A digest of corporation
legislation would, of course, be of much greater bulk t h a n
this. Provisions dealing with circulation h a v e been uniformly omitted as being of no importance in t h e present
state of the national banking laws.




34

Digest of State

Banking

Statutes

Among the abbreviations to which attention should be
called lest they lead to misunderstanding is the use of the
word "municipality," which occurs sometimes to save a
list including perhaps "city, town, county, school district,
or irrigation district," etc.; lists of investments are often
shortened—"United States securities," for example, is
sometimes employed to save such language as "stocks,
bonds, public funds, and interest-bearing securities of the
United States." Among the things omitted may be noted
details of incorporation, what the certificate must recite,
what notice must be given to other institutions in the
neighborhood, whether the charter is lost if business is not
begun within a specified time, etc.; proceedings to increase
and reduce capital stock; details with respect to the deputies and subordinates of the state officials, and the power
of state officials to subpoena, take oaths of witnesses at
examinations, etc.; treatment of minors, married women,
and trustees as depositors and stockholders; fees for examinations ; details of the business trust companies may do as
trustees, guardians, executors, administrators, sureties,
etc.; details with respect to savings-bank pass books;
notice required for withdrawal of savings deposits; proceedings for assessments against stockholders; bonds and
oaths of officers; embezzlement and perjury with respect
to banks, when these offenses seem not different from the
same offenses with respect to other sorts of business;
directors' objections, by which they avoid liability for
illegally declared dividends; limits on the time during
which a bank remains liable for payment of forged or




35

National

Monetary

Commission

raised checks; and t h e order of distribution of assets on
dissolution.
The heading " X L Penalties " is a catch-all for offenses
and their punishment not treated under other heads.
Penalties which entail t h e dissolution of the corporation
and placing it in t h e hands of a receiver appear under I I I ;
a n d since t h e gist of the unauthorized banking provision
is usually t h e punishment, t h a t penalty is uniformly
given under X . Where offenses—directors' borrowing,
t h e making of false reports, etc.—are m a d e misdemeanors
merely, t h a t provision of t h e statutes is noted under
Penalties.
Wherever a reprint of statutes, collected by t h e banking
d e p a r t m e n t of the State, has been used as t h e basis for
t h e digest of t h a t S t a t e instead of t h e published s t a t u t e s
of t h e S t a t e themselves, t h a t is noted in t h e introductory
p a r a g r a p h under the particular State. Many of these
reprints have been compiled from confused sources and
are of high value. The preliminary paragraph under
each state also indicates t h e date to which t h e digest
has been brought, usually through the 1909 legislative
session of the State, if one was held. The material for
each State has been sent to the supervisor of banking
in t h a t State, with a request for his suggestions. The
following officials have been most courteous, and the
digest has profited greatly by their correction and help:
Mr. T. J. Rutledge, state bank examiner of Alabama;
Mr. W m . L. McGuire, secretary, board of b a n k commissioners of California; Mr. E. W. Pfeiffer, state b a n k commissioner of Colorado; Mr. Charles H. Noble, b a n k com-




36

Digest

of State

Banking

Statutes

missioner of Connecticut; Mr. Charles H. Maull, commissioner, department of insurance and banking, Delaware; Mr. A. C. Croom, comptroller of Florida; Mr.
J. P. Brown, state treasurer of Georgia; Mr. Wm. G.
Cruse, bank commissioner of Idaho; Mr. J. S. McCullough, auditor of public accounts of Illinois; Mr.
J. C. Billheimer, auditor of Indiana; Mr. John L. Bleakly,
auditor of Iowa; Mr. William S. Albright, assistant bank
commissioner of Kansas; Mr. Ben L. Bruner, secretary of
state of Kentucky; Mr. W. L. Young, bank examiner of
Louisiana; Mr. William B. Skelton, bank commissioner
of Maine; Mr. Murray Vandiver, treasurer of Maryland;
Mr. Charles L. Burrill, secretary to the bank commissioner
of Massachusetts; Mr. H. M. Zimmermann, commissioner
of banking of Michigan; Mr. A. Schaefer, public examiner
of Minnesota; Mr. E. J. Smith, auditor of Mississippi; Mr.
F. H. Ray, state examiner of Montana; Mr. E. Royse,
secretary of state banking board, Nebraska; Governor
D. S. Dickerson, chairman, and Mr. M. M. Van Fleet,
bank examiner and secretary, state banking board of
Nevada; Mr. Richard M. Scammon, bank commissioner
of New Hampshire; Messrs. D. O. Watkins and Vivian
M. Lewis, commissioners of banking of New Jersey;
Mr. C. V. Safford, traveling auditor of New Mexico, and
Mr. A. L. Morrison, jr., chief clerk; Mr. Clark Williams,
superintendent of banks, and Mr. George I. Skinner,
first deputy superintendent of banks, of New York;
Mr. H. C. Brown, clerk of the corporation commission
of North Carolina; Mr. B. B. Seymour, superintendent
of banks of Ohio; Mr. A. M. Young, commissioner of
banking of Oklahoma; Mr. James Steel, state bank ex-




37

National

Monetary

Commission

aminer of Oregon; Mr. John W. Morrison, deputy commissioner of banking of Pennsylvania; Mr. William P.
Goodwin, bank commissioner of Rhode Island; Mr. Giles
L. Wilson, state bank examiner of South Carolina, and
State Senator T. G. Croft, of the same State; Mr. John L.
Jones, public examiner of South Dakota; Mr. Hallum W.
Goodloe, secretary of state of Tennessee; Mr. Thos. B.
Love, commissioner of banking of Texas, and Mr. Charles
V. Johnson, chief clerk; Mr. C. S. Tingey, secretary of
state of Utah; Mr. F. C. Williams, bank commissioner
of Vermont; Mr. Robert R. Prentis, chairman, and Mr.
Richard T. Wilson, clerk, of the state corporation commission of Virginia; Mr. S. V. Matthews, commissioner of
banking of West Virginia; Mr. M. C. Bergh, commissioner
of banking of Wisconsin; and Mr. Harry B. Henderson,
state examiner of Wyoming.
Readers may think the system of references in the digest
is lacking in uniformity. It must be remembered, however, that the condition of the statutes of the different
States—the frequency of revision, system of chapters and
sections, etc.—is lacking in uniformity also, and, what
has been even more important in arranging the system of
references in parenthesis, it was necessary that the references should occupy no more space than necessary. If a
glance is taken in each State at the brief introductory
paragraph, a hint will be found there which will make
the references in parenthesis intelligible.
There follows a tabular summary of the digest. What
has been done is to state in such form as to make them
readily accessible, the few provisions which are law in




38

Digest of State

Banking

Statutes

enough States to make it worth while showing in how
many. The value of even this much summarizing is
problematical, for it has been necessary to consider as
one, provisions which differ in different States; the limit
of individual liability to a bank, for example, may in one
State be a per cent of capital, in another a per cent of
capital and surplus, and in a third a per cent of capital,
surplus, and undivided profits. The tables may, however, serve to show to what extent these most common
provisions are dealt with in some form or other by the
various States. But the reader is cautioned against relying on the tables without reference to the digest itself,
except when he is in search of information of a general
sort; when a page of statute has been reduced to a paragraph or a sentence of digest, and the paragraph or the
sentence has been reduced to a word or two in the table,
the result is a hint, necessarily often an inaccurate one.




39

TABLE A.—TABULAR SUMMARY OF STATE LEGISLATION GOVERNING COMMERCIAL BANKS.
Arizona.

Alabama.

District of Columbia. <

Idaho.

Georgia.

Florida.

Illinois.

Indiana.

$15,000 t o $as»ooo.

Per cent paid in when business begun

$25,000.

All

$10,000 t o $ 3 0 , 0 0 0 .

$15,000 t o $ 5 0 , 0 0 0 . -

$25,000.

Property
worth
$10,000 t o $ i o o . o o o .

SO per c e n t .

50 per c e n t .

20 per cent; n o t less
than $15,000.

50 per c e n t .

All.

Nebraska.

Missouri.

Nevada.

N e w Hampshire.

N e w Mexico.

N e w Jersey.

7 i

See page 63. - .

-

- iYra

Superintendent
banks.

A n examiner o n l y .

Special banking supervisor, if a n y .

S t a t e bank commissioner.

Supervisory duties assigned t o another official.

Y e s ; state treasurer.

Supervisor reports to governor or legislature.

Annually t o governor.

A n n u a l l y t o governor
a n d biennially t o
legislature.

Annually t o governor.

Biennially
ernor.

Supervisor m a y sue for receiver

Yes-

Yes.--

Yes.. _

Yes

Yes.--

Supervisor m a y t a k e possession in insolvency, e t c .
Bank reports: H o w m a n y a y e a r *

Three-

Two,

---

to

gov-

Yes.

5 months.

50 p e r c e n t .

$50,000 t o $300,000-.

So per cent .

50 p e r c e n t

$10,000 t o $ 1 5 , 0 0 0 .

50 p e r c e n t .

All.

Probably all

80 per cent

All.

50 per c e n t .

All.

x year

90 d a y s

1 year

5 months

5 months. .

1 year
10 p e r c e n t .

10 per cent

20 p e r c e n t .

10 p e r c e n t

10 per c e n t .

10 per c e n t . .

20 per c e n t —

20 p e r c e n t .

20 per c e n t -

20 p e r c e n t .

20 p e r c e n t . -

20 per c e n t .

20 p e r c e n t . .

Yes.

_.

Yes.

Yes
Three t o

Hold x share of s t o c k . Hold $500 of stock _ J H o l d 10 shares
stock.

Y e s ; comptroller

fifteen.

Yes

of

Yes

Yes

Three t o n i n e .

A t least five .

A t least five.

Five t o t h i r t e e n .

S e v e n t o fifteen -

Five to s e v e n .

Seven or
twelve.

s

Residents
county;
each of
stock.

Citizens of United
States, etc. (See
page 207.)

Stockholders;
citizens of Maryland.

Citizens of Massachusetts ; holders
of 5 shares, etc.

com-

Quarterly.

Hold 5
stock.

shares

of

Hold from
shares.

2 to

Quarterly b y
mittee.

Bank commissioner. . Examiners o n l y .

Five.

Y e s ; state treasure]

Examiners only _

Examiners o n l y .

Y e s ; s t a t e auditor. .

Biennially
ernor.

Yes..

Yes-.

Yes.,

No

of
the
holders
$500 of

-

Yes

Two.

Four

Bank commissioner.

State examiner
state banks.

of

One.

One or t w o .

-

Yes.

Yes_.
Two

Four-

.! Y e s . .

Five.

gov-

Four.

Biennially
ernor.

Two.

Two

Two-

A t supervisor's discretion.

..*£.

Two
25 p e r c e n t .

15 per c e n t a n d 10
per cent.

Minimum reserve: < W h a t per cent of d e m a n d d e p o s i t s . IS p e r c e n t .
*

One

to

gov-

Yes

Reserve:** W h a t fraction must be in cash

Two-fifths. _.

Reserve :<* W h a t fraction m a y b e in d e p o s i t s .

Three-fifths..

15 per cent or 20 per
cent.

T\io-fifths..

Two-fifths...

Four-fifteenths

Three-fifths.

Eleven-fifteenths

Three-fifths.

!

Four

10 per cent, with e x ceptions (see page
70).

10 per c e n t ,

L o a n s o n t h e bank's o w n stock forbidden 9

YesYes-

AH.

10 per cent unless
amply secured.

Yes-

Overdrafts forbidden

Only forbidden
officers.

Branches

'

-

| Apparently allowed

Permitted if capital
i s increased.

Yes.

One-half-

Three-fourths .

25 per c e n t .

30 per c e n t .

20 per cent: 50 per
cent on mortgage.

Allowed o n increase
of capital, e t c .

Yes.

Three-fourths

- ! One

Yes

See page 251

Four

auditor
Commissioner of bank- Traveling
and bank e x a m ing and insurance.
iner.

10 percent

10 p e r c e n t

10 p e r c e n t .

10 p e r c e n t .

10 p e r c e n t . -

10 per cent

10 p e r c e n t

20 percent

50 per cent

20 per c e n t -

25 p e r c e n t

20 per cent -

20 per cent

50 per c e n t -

No

Yes

Yes

Yes

Yes

Voluntary

Yes

Three 10 thirteen

A t least three

A t least five

Five t o twenty-five.

A t least

H o l d Ssoo of s t o c k . _ Hold $500 of s t o c k . _ Citizens of U n i t e d
States a n d Pennsylvania:
each
holder of 10 shares.

Must hold 5 to zo
shares, e t c .

Majority citizens of
Virginia; each o w n
$100 of stock.

-.

five.

Citizens of United
States;
threefourths residents
of N e w York; hold
certain stock.

Two-thirds residents
of N o r t h D a k o t a ;
each holder of 10
shares.

Three-fourths residents of
Ohio; each holder of 5
shares.

Semiannually

Semiannually.

Annually b y c o m m i t t e e . _| Semiannually _

I

of

Superintendent of b a n k s .

Examiners «mly_

fes; c o r p o r a t i o n
commission.

Yes.-

Yes.

Yes

Yes

Yes

Annually t o legislature.

Yes

_-_

Two-thirds.

Allowed.

10 m o n t h s .

F i v e to thirty.

Y e s ; state examiner- Y e s ; state banking
board (governor,
auditor, and attorney-general).

Annually t o secretary of state.

Bank commissioner-

A t least three

A t least t h r e e . . .

Yes

. . . Yes

Bank examiner-

C o m m i s s i o n e r of
banking.
4 years.

Bank commissioner. - B a n k examiner .

Four-

Four.

Yes..

Two.

Four.

Yes
Four

Yes
-.

Yes
Apparently s e v e n . _

Four

Four

Annually t o governor.

Yes.

Annually to legislature.
Yes._

Two.

One

Two .

One.

Two.

Two _

One.

A t supervisor's discretion.

Four.

One

Two

Eight twenty-fifths -

One-half.

One-half.

15 per cent and 20
per cent.

One-third __

Five

Annually

20 per cent

Three-fifths, one-half,
two-fifths.

Two-fifths..

One

A t supervisor's discretion.

Seventeen
fifths.

twenty-

One-half .

One-half.

A portion at directors'
discretion.

All.

Two-thirds _

Three-fifths. .

Three-fifths__

Three-fifths.

15 per cent and 25
per cent.
10 p e r c e n t .

lH

isi>ercent.

Two.

50 per c e n t -

All

50 per c e n t .

2^ years
10 per c e n t .

6 months
10 p e r c e n t

20 per cent

20 per c e n t .

20 p e r c e n t

Yes

Yes

Yes

A t least t h r e e .

A t least three-

Five to nine.

Must hold 5 shares.

Stockholders; majori t y residents of
Wisconsin.

Citizens of U n i t e d
States;
majority
residents of W y o ming; owners of
certain stock.

Semiannually
by
committee of directors or stockholders.

Yes; commissioner
of agriculture, insurance, etc.

Yes; secretary
state.

State examiner..

C o m m i s s i o n e r of
banking.

C o m m i s s i o n e r of
banking.

Yes

Yes

Annually t o governor- A n n u a l l y t o governor. Annually t o governor- Annually t o governor.

Biennially t o legislature.

.
{

Four.

Five

T w o (see
624).

page

Two

Yes_.

One.

Four.

Yes...

Yes

Three.

Four

Five

1

IS

Four-

Yes

14

Yes_.

Yes

Yes.-.

Yes.

Yes.

Yes.

Yes; state examiner.

Y e s ; corporation c o m mission.

of

16
17

Biennially..
Two.

Four; but s e e
page 625.

15 per cent a n d 20
per cent.

25 per c e n t -

One...

One

20 per c e n t .

One.

Four

One.

18

15 p e r c e n t .

19

per c e n t .

f One-third..

One-third..

One-third of d e m a n d
reserve.

Two-thirds.

A l l n o t held in cash
or bonds.

Two-fifths

One-tenth

Two-fifths.-.

Two-thirds.

15 per cent and 25
per cent.

20 per cent a n d 25
per c e n t .

15 per cent and 25
per cent.

20 per cent and 25
per cent.

I
6 per cent of demand deposits and 4 per cent of
f time deposits in cash;
the rest deposited.

five.

— B a n k commissioner.

Annually t o legislature.

15 p e r c e n t . .

_

Three-fifths. _

gov-

Yes

Two-

Two-fifths...

Two-fifths, one-half,
three-fifths.

Two-fifths. _ .

15 per c e n t .

A n examiner only

Savings
deposits
every 5 years.

Two

25 per cent, 20 per
cent, and 15 per
cent.

15 p e r c e n t .

Two-fifths.

15 Per cent and 25
per cent.

Two

One.

10
15 per cent and 20
per cent.

Like national banks .

i Four.

15 p e r c e n t .

iS p e r c e n t .

Four.

Annually.

Five

to

_

Yes

,' 6 per c e n t . .

Two

Four

To l e g i s l a t u r e : Biennially
through treasurer. .
ernor.

Yes

Yes..

Yes...

$10,000 t o $100,000-.

4 y e a r s . _•
Y e s ; state e x a m i n e r . Y e s ; s e c r e t a r y
of state and
comptroller.

$io,coo to $50,000.

Quarterly.

Examiners o n l y -

3 years

Biennially.

Yes. .

Yes

Banking d e p a r t m e n t .

$25,000; m a x i m u m ,
$500,000.

Yes

5 percent(seepage678)
Yes.

_

Semiannually _

T o a certain e x t e n t ;
board of bank incorporation (commissioner, treasurer, and attorneygeneral) .

Yes

Yes..

Majority residents of
S o u t h Dakota,
e t c . ; each holder of
5 shares.
Semiannually.

Annually t o commissioners.

Annually t o governor.

H o l d $500 of s t o c k . _ Hold 10 shares of
stock.

Quarterly

T o a certain e x t e n t ;
board of commissioners (governor,
secretary of state,
and state treasurer).

Y e s ; state examiner
and banking board J
(governor, secretary of state, and
attorney-general).

A n n u a l l y t o legislature.

Annually-

Yes..

Yes-.

.

Yes

Yes

Superintendent
banks.

25 p e r c e n t

Property
worth
$10,000 toSxoo,000

$10,000.

10 per c e n t .

I 3 years

Report t o Commissioner every 3 years.

30 p e r c e n t .

20 p e r c e n t unless secured.

Yes

Yes..

Yes

Yes..

10 per cent and 20 per
cent on mortgage,etc.

15 per cent and 20
per cent.

25 per c e n t -

Restricted

Yes.

Yes.

Yes.

Yes

Yes

Yes-

Yes.

Yes.

Yes

Yes

Loans, eight t i m e s .

Three-fifths..

Ycs.

Yes-

Yes.
Indirectly

Allowed.

Yes
jm

• Yes

Yes

a See page 60 for t h e impossibility of summarizing Arkansas.
6 T h e equivalent of state b a n k statutes is, in Maine, under trust companies.
c There i s n o legislation o n state banks in Vermont.
d Where more t h a n one figure is given in answer to the question, i t is generally because the statute provides different rules for banks in communities of different sizes.
I n reserves t h e difference is sometimes t h a t between a reserve depositary and a bank not designated as one.

_-_

10 p e r c e n t .

10 per c e n t .

Yes

Yes

Yes...

Yes

Yes-

Yes

Yes

Yes

Yes.

Yes...

Allowed for 90 d a y s . .

Apparently allowed.

Prohibited..

..

Yes.

Yes

Yes

_

Apparently a l l o w e d .

Apparently allowed-

Prohibited .

Prohibited. _

Compulsory .
' T h e reports and examinations here tabulated are only t h e regular reports t o s t a t e officials and t h e regular examinations b y state officials. T h e number given is
usually t h e minimum per year; m a n y S t a t e s provide for special reports and examinations at the supervisor's discretion.
/ T h e provisions restricting individual liability v a r y greatly, a s will appear o n reference t o the b o d y of the digest. T h e per c e n t is sometimes of capital, sometimes
of paid-in capital, sometimes of capital and surplus, e t c Liability of a n individual firm or corporation frequently includes the liability of members. Commonly liability
i s not considered increased b y t h e discount of bills of exchange drawn in good faith against existing v a l u e s nor b y t h e discount of commercial paper actually owned b y
t h e person negotiating it. Where there are further exceptions (as i n statutes which allow liability b e y o n d the per cent named, if security is given), an effort is m a d e in t h e
table t o suggest this.

No. ib.

Yes

„

Yes

30 per c e n t -

25 per cent, with e x ceptions.
Yes

Yes

Yes

Yes

Yes

-

Yes.

A s directors
mine.

First lien o n l y , e t c . .

Yes
Forbidden t o officers,
directors, etc.

Yes. _

Yes
Apparently a l l o w e d . .

Yes

_.

deter-

All-

25 per c e n t -

xS per c e n t .

Three-fifths. .

A t directors'
cretion.

20 per c e n t -

All-

Nine-tenths. .

Yes

Yes

Apparently allowed.

Yes.

Forbidden t o officers.

-

In effect forbidden

Compulsory.

Yes

dis-

30 per cent, with e x ceptions.

Deposits,
times.

Apparently allowed,
e x c e p t t o officers,
etc.
Seem forbidden.

Yes-

Yes-

Yes.

Yes.

Yes.

Yes-

Yes.

Deposits limited (see
page 6 3 0 ) .

fifteen

Limited t o 50 per
cent of capital and
deposits, w i t h e x ceptions.

Limited
in
total
a m o u n t a n d value
(see page 637)-

One-half capital and
one-half deposits
only m a y b e so
loaned.
Yes

20 p e r c e n t .

Yes-

Yes

Yes

Allowed if capital is
increased.

Allowed in h o m e c i t y
o n increasing capital, etc.

25 per c e n t .

Yes

Yes

First liens o n P e n n sylvania land; limi t e d in a m o u n t .

Restricted (see page 514) _| First mortgages for
n o t longer than 1
year, etc.

Yes-

zo per cent, with exceptions.

Deposits, ten times.

Yes

Deposits, ten times
Restricted (see page L~
464).
!:

Yes

Prohibited..

25 per cent and 40
per cent (see page
463).

30 per c e n t .

20 per c e n t .

Land must b e worth
twice the loan.

Yes

Apparently allowed-

Allowed.

20 per cent, with exceptions.

x 5 per cent _

Loans, eight t i m e s .

20 per c e n t .

Loans, twice .

Voluntary .

No. 10.

Board of bank c o m missioners.

All-

Wyoming.

50 per c e n t .

$10,000 t o $100,000;
m a x i m u m $1,000,000.

Wisconsin.

10 p e r c e n t . . ,

$10,000 t o $100,000. .

W e s t Virginia.

5 months

Utah.

Washington.

Virginia.

Vermont.*

Texas.

] 5 months

4 years..

of

See page 2 5 3 .

15 per c e n t .

Yes

Depositors' guaranty s y s t e m -

(To follow page 39.)

State banking board
(governor and four
appointees).

by

Tennessee.

20 per c e n t -

Yes--.
A t least

South Dakota.

$10,000 t o $ 5 0 , 0 0 0 .

' 4percent__

Two

Yes.

Restricted in case of
directors, etc.
! Prohibited.

Examiners o n l y .

N o t more than n i n e .

five.

South Carolina.

One-third of b o t h dem a n d a n d t i m e reserve.

Yes

Yes

Possibly allowed..

Prohibited. . _

Semiannually
committee.

Y e s ; state auditor-

N o t over 50 per cent
of capital, etc.

to

Semiannually _

Yes..

First liens only..

Yes

Quarterly _ . *

Yes

Five.

Deposits, t e n t i m e s .

R e a l e s t a t e holdings limited A _

Semiannually.

Yes

.j A n n u a l l y .

One-fourth

T o t a l loans or deposits restricted t o w h a t proportion t o
capital.
L o a n s o n real estate restricted

Annual examination
b y committee of
stockholders.

A t least

Three t o thirteen

Annually t o legislature.

20 per cent and 25
i S per cent and 25
per cent.
j
per cent.

Yes-

Yes-

Yes.

Majority residents of
New Jersey; each
holds 5 shares.

Bank commissioner.

Quarterly.

Hold 5 t o 10 shares of
stock.

Citizens of United
States;
3 residents of Montana;
each holder of 10
shares.

fifteen.

6 months

All.

20 per c e n t .

Yes.

Yes.

B a n k forbidden t o purchase i t s o w n stock 0

20 per c e n t .

Three-fifths. -

by

Majority residents of
county; each holder o f
specified
amount of stock,
etc.

Annually t o governor. Annually t o governor.

! Yes.

Probably yes

Residents of local
c o u n t y ; holders of
specified amounts
of stock, etc.

Annually t o legislature.

Annually

[ One-third . .

No.

No

Three t o

Biennially t o legislature.

Four

One-fourth

One-half-

Two-fifths...

Annually t o governor.

Four

See page 1 7 1 .

Semiannually
committee.

Yes

Residents of Missouri; each holder
of 2 shares.

Hold 10 shares of j Hold $300 t o $500 of
stock.
stock.

by

_

1 year

Three to t w e n t y - o n e . Not more than thirteen.

A t least three.

4 years

3 years

Yes

10 per cent a n d 15
per cent.

Three-fifths. -

Two-thirds .

One-fifth

R e s e r v e : W h a t fraction m a y b e in securities.

Individual borrower's liability limited t o what per cent
of capital. /

One-third _ .

_.

25 per c e n t .

20 p e r c e n t .

iS p e r c e n t .

' Yes

Yes. . .

N o t more than
per cent.
i s per c e n t .

five.

T o a certain e x t e n t ;
board of bank incorporation (bank
comr., treasurer,
receiver genl., and
corporation comr.).

Yes

Reserve:** What per cent of time deposits
Reserve: < What per cent of all d e p o s i t s . - _
*

A t least

Y e s ; state treasurer.

Biennially to legislature.

15 per c e n t .

A t supervisor's discretion.

to

B a n k commissioner.. C o m m i s s i o n e r of : Superintendent
banking d e p a r t - j
banks,
ment.

Annually.
One.

nine

Yes

No

Yes

Examiner merely—-

Bank commissioner.

Y e s ; secretary of state

Biennially. -

Biennially .

Unclaimed deposits m u s t be published

Yes-

to

Yes

No

Semiannually
committee.

Y e s ; state a u d i t o r .

Biennially t o legislature.

Y e s ; state auditor-

Yes

Yes..

Three

Three..

5 months

50 p*r c e n t .

20 per cent

Yes.

Two.

5 months

$25,000 t o $100,000- ' - J $5.ooo t o $ 2 5 . 0 0 0 - . .

10 per c e n t . .

Annually t o governor. Annually t o governor.

Yes.

50 p e r c e n t .

$30,000.

20 per c e n t . .

Annually t o governor.

Yes

Yes

Y e s ; Comptroller of
the Currency (U.S.)

50 per c e n t .

$50,000.

3 yearsY e s ; insurance commissioner.

Y e s ; auditor of territory.

All.

$10,000 t o $50,000 _

4 years .

-

50 per cent .

$10,000 t o $ 2 0 0 , 0 0 0 . .

10 p e r c e n t

A n examiner o n l y .

T w o bank commissioners.

50 per cent .

$20,000.

All...

Semiannually _

of

50 per c e n t .

$10,000 to $100,000;
maximum,$5,000,000.

i i

Rhode Island.

$ 2 5 . 0 0 0 to $ 5 0 , 0 0 0 .

$10,000 t o $ 1 5 , 0 0 0 .

20 p e r c e n t

Annually.

Directors: Must examine, how of ten .

$10,000 t o $ 5 o , o o o .

$20,000 t o $ 4 0 0 , 0 0 0 . . $10,000 t o $25,000 . . .

10 p e r c e n t .

All citizens of U n i t e d
States; three-fifths
residents of Florida; each holder of
to shares of stock.

Three-fourths must
be residents of
Connecticut.

Hold $500 of s t o c k .

Directors: Qualific

$10,000 t o $ 1 0 0 , 0 0 0 . .

$100,000; maximum.
$1,000,000.

20 p e r c e n t -

A t least five.

N o t more than n i n e .

Directors: How m a n y

$25,000. .

$50,000 t o $300,000;
maximum, $500,000
t o $2,000,000.

10 p e r c e n t

Yes

No

$10,000 t o $ 5 0 , 0 0 0 . -

$15,410 t o $ 1 0 0 , 0 0 0 . . $10,000 t o $ 1 0 0 , 0 0 0 .

2 years (see page 3 81 j

Pennsylvania.

Oregon.

Oklahoma.

Ohio.

North Dakota.

North Carolina.

New York.

50 per cent

Until w h a t per cent of capital




Mississippi.

Minnesota.

Michigan.

10 p e r c e n t

20 p e r c e n t . .

S. Doc. 353, 61-2.

Massachusetts, j

25 p e r c e n t

10 per c e n t * .
20 per c e n t . .

3i

Maryland.

Maine.*

$10,000 t o $50,000

6 months

10 p e r c e n t —

30

Louisiana.

5 months

25 p e r c e n t —

Examinations: H o w m a n y a y e a r *

$25,000 to $ 5 0 , 0 0 0 . . .

Kentucky.

5 months

-

Surplus: Per cent of net profits t o be d e d u c t e d .

Term of office of supervisor

Kansas.

50 per c e n t -

10 per c e n t . .

D o u b l e liability of stockholders

Iowa.

$25,000 t o $ 2 0 0 , 0 0 0 . . $ 2 5 , 0 0 0 .

All.

Minimum capital <*.

W h e n remainder m u s t b e paid

Delaware.

Connecticut.

Colorado.

California.

Arkansas.**

Yes.-.

Yes

Yes

Apparently
lowed.
Voluntary.

ofthe limitations o n a bank's holding its o w n stock, either a s collateral or outright, is c o m m o n l y subject t o the proviso t h a t the stock m a y b e held if it is necessary
pAh<
t o takeJit t o prevent loss o n a d e b t previously contracted o n security thought adequate a t the time. T h e statutes allowing stock t o b e thus taken usually require it t o
be so.ci£»thin a certain time—six months, a year, e t c .
h For typical limitations o n real estate holding, see the provisions of the N e w Jersey statutes, o n page 418, and of t h e N e w York statutes, on page 466.
t Other than t h e national banking act, there is n o statute in force in the District of Columbia providing for the organization of commercial banks.
y T h e Massachusetts bank s t a t u t e s here tabulated are obsolete; see page 246.

Yes

Yes.

Yes-

Limited t o 5 per cent
of deposits.

Apparently allowed-.

Allowed for 60 d a y s -

Allowed

---

al-

Allowed on increase
of capital.

Forbidden.

Compulsory—
No. ic.

Allowed for 90 d a y s .

Forbidden,

TABLE B.—TABULAR SUMMARY OF STATE LEGISLATION GOVERNING SAVINGS BANKS.
[General n o t e : In m a n y states the statutes contemplate t h a t savings bank business be d o n e b y commercial banks, n o t b y institutions d e v o t e d exclusively t o savings banking. I n such cases the s t a t u t e s applicable t o commercial
banks are again tabulated here, although t h e y m a y seem in certain respects inapplicable t o savings business—as, for example, where reserves are required t o be a percentage of demand deposits.]
Arkansas. 6

Arizona.

Alabama.

California.
Yes-

No.

S a v i n g s banks legislated for separately _

No..

Yes.....

S a v i n g s banks subject t o the same laws as commercial
banks.

Yes..

I n part-

E x c e p t where legislated for
separately.

Apparently b o t h .

If stock, w h a t m i n i m u m capital «

$25,000-

$15,000 t o $ 2 5 , 0 0 0 .

Directors: Qualifications .

I n mutual, m u s t be
members and depositors.

Directors: Must e x a m i n e periodically.

Yes...

Supervisor m a y sue for r e c e i v e r .

9

Supervisor m a y take possession in insolvency, e t c .
B a n k reports: H o w m a n y a year**.*

.......

Two. .

E x a m i n a t i o n s : H o w m a n y a year
13

d

. . . ..

Yes-

Three.

One

One.

No

Query .

Yes

Two

$10,000 t o $100,000-

!

A t least

five.

A t least

A t least five

Yes_.

Yes..

Hold $500 of stock_

Hold 10 shares of
stock.

H o l d from
shares.

Quarterly b y
mittee.

by

com-

Five.

Two.

Two

Four..

At d i s c r e t i o n
Comptroller
Currency.

of
of

Two.

One.

E v e r y other y e a r . . . . See page 1 7 1 .

20 p e r c e n t .

20 per c e n t .

15 per c e n t of dem a n d liabilities.

N o t more than
per cent.

Reserve:* How composed.

Three-fifths deposited, two-fifths
cash.

Cash or i t s equival e n t ; one-half in
currency.

Cash or d e p o s i t s .

Two-fifths
cash;
three-fifths deposi t s or bonds.

Half cash, half deposits.

Cash or deposits

First liens only, e t c . .

First liens o n land
worth twice the
loan.

$1,000 annually

Yes..

R e a l e s t a t e holdings limited / _




$3,000

First liens on Conn e c t i c u t land,
worth twice the
loan.

First liens on Florida
realty only, etc.

First liens on land
worth twice the
loan.

Fully.

Yes.

Fully.

I n v e s t m e n t s prescribed

S. Doc. 353, 61-2.

cent of all
m u s t b e first
o n Arizona
etc.

(To follow page 39.)

No. 2a.

Briefly.

Fully.

Yes._.

Yes

Yes...

Four .

A t least e l e v e n .

A t least

Stockholders;
ci tizens of Maryland.

See page 2 59

H o l d 10 shares
stock.

Annually by c o m m i t tee of five.

Annually
mittee.

Two.

.,

20

8 percent

One-half cash,
half bonds.

one-

Yes

Very briefly..

Yes

Yes

-.

' Almost e n t i r e l y —

In

$ too, 000; maximum
$500,000.

F i v e t o thirteen

N o t more than thirteen.

Three t o

com-

S e m i a n n u a l l y by
committee.

Residents in
county, etc.

Stockholders; a majority citizens of
Missouri.

Citizens of United
S t a t e s ; threefourths residents
of Montana; each
holder of 10 shares.

H o l d 5 shares
stock, etc.

to

the

Quarterly.

Annually through an
accountant.

One.

E v e r y 5 years. .

One.

Two

Two.

No

Yes

Practically, n o

No_

Yes

In part.

Query

Yes

$10,000 t o $50,000

$25,000.

A t least three

A t least thirteen

Three-fourths residents of
Ohio; each holder of 5
shares.

H o l d $500 of s t o c k .

Quarterly _

Semiannually _

Annually
mittee.

Semiannually
committee.

Semiannually.

Annually b y c o m m i t t e e .

Quarterly .

Annually.

Yes__

Yes-

Yes._

Yes-

Yes..

Yes-.

One..

Four..

Four .

Four-

E v e r y other y e a r .

One.

Two

Two

15 per cent and 25
per cent.

5 per c e n t .

No-

Only with respect t o
supervision.

Probably, y e s .

Arc departments c
banks and trus
companies.

Probably, yes_

Are departments of
banks and trust
companies.

by

Yes.

Yes-

Yes

Yes-

Yes...

Yes..

Three

One

Two

Two .

Four .

Five.

Annually

Annually .

Annual report
to
superintendent.

One

....

Yes...

See page 4 2 2 .

Every other year

One.

E v e r y other year

Yes.

_.

-.

No—

$zo.ooo t o $100,000;
maximum,$x,ooc,-

Yes._
Four.

Annually b y
mittee.

_.

Like national banks . T w o

Practically, n o .

Yes

Yes

Yes

Yes

I n part-

Largely.

In part.

Yes..

Yes..

Property
w o r t h
$10,000 t o $100,000.

Five t o thirteen
Hold xo shares
stock.

A t least five-

A t least three

Stockholders; a m a jority citizens of
Texas.

N o office in another
savings bank, e t c .

Majortty citizens of
Virginia;
each
holder of $100 of
stock.

Must each hold
shares of stock.

B y committee, before Before each dividend
declari ng dividends.
and annually b y
committee.

of

Seven t o e l e v e n .

S e m i a n n u a l l y by
committee; and before dividends.

Quarterly _

Yes-

Yes-

of

com-

Yes

Yes-

Yes.

Yes.
_..

A few provisions .

$10,000.

Yes-

Yes-

Yes..

Hold 10 shares
stock.

Yes—

Two..

Biennially

Annually-

A t supervisor's discretion.

Two.

Four .

Two.

Three.

Yes-

$25,000.

Fifteen. .
5

A t least nine. .

Citizens of W e s t Virginia.

S e m i a n n u a l l y by
committee.

Five to n i n e .
Citizens of United
States;
majority
residents of W y oming; holders of
certain stock.

S e m i a n n ually b y
c o m m i t t e e of directors or stockholders.

One

Four .

E v e r y six years _

Yes

Apparently, y e s .

Yes-

Yes..

Three

Four

Five-

Four.

Biennially.

One.

Yes
Yes

E v e r y five years. .

One.

Four .

Wyoming,

Yes

Yes
In part.

Practically, n o .

Wisconsin.

W e s t Virginia.

_

Annually..

One.

One.

One

One.

.........

Yes-

Two.

15 p e r c e n t .

5 per cent of all deposits.

20 per c e n t of all deposits.

15 per c e n t of all deposits.

20 per c e n t .

x 5 and 25 per cent of
demand, 10 per
c e n t of l i m e .

7>a per c e n t of time
deposits.

15 per c e n t of total
assets.

10 per c e n t .

30 per c e n t of d e mand liabilities.

15 per c e n t of d e mand deposits.

5 per c e n t .

xo per c e n t of savings deposits.

I n available funds

One-third, cash; twothirds, deposits.

Cash or deposits

T w o - f i f t h s cash,
three-fifths deposits.

3 per c e n t of d e m a n d and
and 2 per cent of t i m e
in c a s h ; t h e same in
securities; t h e rest d e posited.

One-half cash, onehalf securities.

One-third cash, t w o thirds deposits.

Cash, deposits, and
not more than onethird bonds.

Cash or deposits.

Cash or deposits.'.

Cash, checks,
deposits.

Two-fifths
cash;
three-fifths deposits.

Cash or deposits _

Cash or d e p o s i t s .

First liens on land
worth twice the
loan.

First and in some
cases, second liens,
etc.

First, and in s o m e
cases, second liens,
etc.

Briefly-

Briefly

$4,000

$2,000

First liens only o n
Massachusetts realty, etc.

First liens on realty
worth twice the
loan.

A t great length _

Fully.

Fully.

Fully.

Very briefly..

Yes.

Yes..

Yes...

Yes-

Yes

I

No

Washington.

Virginia.

One .

I n cash or d e p o s i t s . . ! In cash or deposits..

First liens on land
worth twice the
loan, etc.

No

Vermont.

Utah.

Texas.

One.

One-third cash, t w o thirds deposits.

First liens o n Minnesota land, etc.

No

Residents of Pennsylvania, e t c .

Yes..

Tennessee.

A t least nine. .

Two-thirds residents
of North D a k o t a ;
e a c h holder of 10
shares.

Yes..

South Dakota.

$ t o , o o o t o $50,000;
m a x i m u m , £5,0 00.000.

With respect t o supervision, etc.

Residents of N e w
York; financially
responsible, etc.

com-

South Carolina.

South Dakota.

Yes.

Majority residents of
c o u n t y and freeholders in N e w
Jersey, etc.

by

South Carolina.

Yes$5,000 to $25,000.

N o t more than n i n e . . A t least thirteen

fifteen.

I

$10,000 t o $ 5 0 , 0 0 0 .

Five t o thirty.

Rhode Island.

H o l d 5 to 10 shares
of stock, etc.

Yes-

$5,000

Pennsylvania.

Oregon.

Yes..

Yes$15,000 t o $30,000..

R e p o r t t o commissioner every three
years.

Four.

Oklahoma.'

: Yes

I n a few respects

Nine t o

Ohio.

j Practically, no

E v e r y five years.._

Four-

$3,000

$5iOOQ

First liens, e t c .

] Elaborately..
Yes

First liens on N e w
Jersey land worth
twice loan, etc.

Restricted b y v a l u e
of t h e land mortgaged (see page
447).

One .

in
First liens only, e t c . . Restricted
amount, etc.

First liens o n Pennsylvania land; limited in amount.

total

Two.

One.

$4.000
First liens only, e t c . .

One-half capital a n d
one-half deposits
m a y be so loaned.

One-half capital and
one-half deposits
m a y b e so loaned.

Practically, n o t .

Elaborately..

Practically, n o t .

Practically, n o t .

Yes.

Practically, n o t _

Briefly.

Elaborately..

Practically, n o t .

Practically, n o t .

Yes.

Yes

Yes

Yes

Yes.

Yes

Yes——

Yes

Yes

Yes

Practically, n o t .

One.

First lien; loan only
three-fifths of
value of land, e t c

and

$2,000.--- . . . . . . . . .

First liens o n land
worth t w i c e t h e
loan.

$5,000.

First liens only, etc.
(See page 475.)

Fully.

!

E v e r y other year

One .

Yes—_

* W h e r e more t h a n o n e figure i s given in answer t o t h e question, i t is because t h e s t a t u t e provides different rules for institutions in communities of different sizes. I n reserves, t h e difference is sometimes that between a reserve
depository a n d a bank n o t designated as o n e .
b S e e page 58 for t h e impossibility of summarizing Arkansas.
* T h e confused condition of t h e Louisiana s t a t u t e s h a s m a d e a summary of savings bank and trust c o m p a n y provisions seem unprofitable; see page 205 of the digest.
< T h e reports and examinations here tabulated are o n l y t h e regular reports of state officials and the regular examinations of state officials. T h e number given is usually the minimum per year; m a n y S t a t e s provide for special
*
reports a n d examinations at t h e discretion of t h e supervisor.
* See digest, page 530, for t h e difficulty in determining w h a t statutes apply t o savings b a n k s in Oklahoma.
t For a typical limitation o n real e s t a t e holding, see t h e provisions of t h e N e w Jersey s t a t u t e s o n page 426

No. 26

__ Y e s

North Dakota.

Majority residents of
c o u n t y ; each
holder of certain
stock, etc.

of

Yes..

Yes..

One-third cash, t w o thirds deposits.

Yes

North Carolina.

Semiannually _

Before each dividend is declared,
etc.

15 per c e n t .

Yes

N e w York.

re-

Three t o thirteen _

fifteen.

Yes-

Yes..

.-

few

Both.

Yes..

.

a very
spects.

Yes

Yes._

$15,000 t o $75,000 — $10,000 t o $50,000-.

15 per cent of total
assets.

Elaborately.
Yes

Yes.

$10,000 t o $ i o o , c o o ;
maximum, $5,000,
000.

First liens on Maine
or N e w H a m p shire realty, etc.

First lien o n I o w a
land worth twice
the loan.

A few provisions

N e w Mexico.

N e w Jersey.

N e w Hampshire.

I
! Yes

Almost entirely

$2,000

First lien o n Indiana
realty worth twice
the loan.

Yes .

One .

Nevada.

In p a r t .

10 per c e n t .

20 p e r c e n t .

One-fourth
cash,
three-fourths deposits.

by

of

One

Five
Biennial report
comptroller.

_

Nebraska.

Only with respect t o
supervision, etc.

A t least s e v e n . .

five.

Yes-

Yes

One.

Two

$500 annually..

Yes.

F i v e t o seven

Yes.Four -

' Yes

I

$10,000 t o $15,000

Yes

Yes

Yes

Montana.

Perhaps in some matters.

some m a t t e r s .

$20,000 t o $400,000-

Annually b y c o m m i t t e e of two.

Yes —

in

j

Yes.

Both

Annually.,

One .

-iln

Restrictions on officeholding in other
banks.

Biennially.

A t supervisor's discretion.

N o t mentioned
statutes.

• Yes.,

Yes-

page

A t least five-

Quarterly .

Four..

One.

4 per c e n t .

50 per
loans
liens
land,

com-

(See

$50,000 t o $ 3 0 0 , 0 0 0 ;
m a x i m u m , S5000 0 0 t o $1,000,000.

$15,000 t o $100,000.

2 t o 5 j R e s i d e n t s of the
!
county;
each
holder of $500 of
stock.

Yes...

Yes.

to

Two.

Must be approved
b y a judge.

Yes-

Two.

I n part.
236).

Yes

Five to thirteen.

Yes-

Yes..

Yes..
One

five.

Annually
mittee.

AU citizens of U n i t e d
S t a t e s ; threefifths residents of
F l o r i d a ; each
holder of 10 shares
of stock.

A few provisions

Somewhat.

Yes..

Missouri.

Mississippi.

Michigan.

Massachusetts.

Maryland.

Maine.

I

$10,000 t o $ 5 0 , 0 0 0 — $10,000 t o $50,000

$25,000 t o $200,000 .

x 5 per cent of demand
deposits.

L o a n s o n real estate restricted

Probably, y e s

Louisiana.«

Yes..

Minimum reserve:* W h a t per c e n t of deposits .

M a x i m u m deposit allowed a n i n d i v i d u a l .

No

Practically, n o

In part.

Yes

$20,000 _

Annual report
comptroller.

Yes

Yes.

Yes

Yes—

Biennially-

One or t w o .

Very briefly—

Annually through au
ditors.

Three

11 I R e p o r t s of unclaimed deposits m u s t be published.

No

Kentucky.

Kansas.

Indiana.

Illinois.

Almost entirely.

In a few respects.

Must be stockholders.!

Yes.

' Three.

Idaho.

Georgia.

Florida.
Briefly

Very briefly .

$*5.<

Yes.

_J Yes...
..j Yes...

District of Columbia.

Yes-

Annually.

8

. Practically, n o

T o a certain e x t e n t
(see page 8 3 ) .
I

A t least three

Directors: H o w m a n y

Delaware.

Yes_.

Both.-_

Mutual, n o t stock, corporations provided for.

10

Connecticut.

Colorado.

$1,000 a year
First liens o n land in
West Virginia or
adjoining States,
etc.

First liens o n land in
certain States, e t c .

First liens o n l y . .

Briefly _

Practically, n o t .

Yes-

Practically, n o t .

Practically, n o t .

Yes—

Very briefly..

Very briefly..

Yes

Yes

Yes..

Yes

Yes

Yes-

Yes

Yes

No. 2c.

TABLE C-—TABULAR SUMMARY OF STATE LEGISLATION GOVERNING TRUST COMPANIES.
Alabama.
Trust companies legislated for separately

Yes..

Minimum capital a -

$25,000 t o $200.000..

All.

Per cent paid in when business b e g u n .

Query.

...

.#- . .

Colorado.

E x c e p t where legislated for s e p a rately.

Yes..

Yes-

Trust companies subject t o l a w s governing commercial
banks.

California.

T o a certain extent
(see page 83).

Arkansas.*

Arizona.

Delaware.

Connecticut.
No.

Yes__

In a few m a t t e r s .

$ 1,000,000
$1,200,000.

$50,000 t o $250,000-

I $50,000 t o $ 1 0 0 , 0 0 0 - . $ 2 0 0 , 0 0 0 . - - . . .

50 per c e n t .

All.

AU-

Very briefly

6

$35,000;
35,000;

not

over

$2 f OOO!

20 per cent; n o t less
t h a n $15,000.

9

Directors: H o w m a n y - - .

lo

Directors: Qualifications.

H o l d $500 of s t o c k .

Directors: Must examine how often .

$10,000 t o $ 5 0 , 0 0 0 — $100,000; m a x i m u m ! $ 1 5 . 0 0 0 t o $ 2 0 0 , 0 0 0 . . .
$1,000,000.
'
<

50 per cent _

All, if n o t
$100,000.

All.

xo p e r c e n t
'
I Yes..

Five t o fifteen

N o t fewer than five— F i v e t o seven

Majority residents of
Kansas;each
holder of $1,000
of stock.

Two-thirds residents
of Maine; e a c h
holder of xo shares.

Quarterly.

Annually b y committee of two.

Trust company reports: H o w m a n y a year *

Three.

Three.

Two.

Five..

Unclaimed deposits m u s t be published _

Biennially.

Examinations: H o w m a n y a year<»

Two

Five-

Yes.-

Four .

Two

Yes-

..

One.

One .

Yes—

Yes

Yes..

Yes.

Y«

Four.

Four

! Yes..

Yes—l-.

Yes-

A t supervisor's discretion.
15 per c e n t a n d 10
per cent.

Minimum reserve:* W h a t per cent of d e m a n d deposits.

Two

One

25 per c e n t .

A t comptroller's discretion.

Yes-

Two.

See p a g e s 171 a n d
178.

15 per c e n t .

80 per c e n t .

xo per c e n t .

1 o per cent_ i

Yes-

20 p e r c e n t

A t least seven .

A t least three

Five t o twenty-five.-I Three to twenty-five.

Hold 10 shares of
stock.

Residents of Minnesota; each holder
of xo shares.

Stockholders; a m a jority citizens of
Missouri.

One.

Two

Four..

N o t more than 5 .

Reserve: « W h a t fraction m u s t b e i n cash

Two-fifths . .

Four-fifteenths. . _

One-third..

Reserve: a W h a t fraction m a y b e in d e p o s i t s .

Three-fifths .

Eleven-fifteenths .

Two-thirds .

Yes..

Practically n o . .

No..

Yes.

Yes-

I n m a n y respects

Yes.

Yes.

Probably n o t .

Largely .

In part..

$100,000.

$100,000

$100,000 to $ 2 0 0 , 0 0 0 ;
maximum, $ 1 0 , 000,000.

$10,000 to $50,000

$5 0,000; maximum,
$2,000,000.

$25,000.

$25*000 t o $ 1 0 0 , 0 0 0 .

$ 5 0 , 0 0 0 ; maximum. $35,000 t o $100,000$10,000,000.

Probably 50 per cent.

$50,000.

50 per c e n t .

50 per c e n t .

50 per c e n t .

AU.

All

2 years

5 months

6 months...

Probably xo per cent

10 per c e n t .

xo per c e n t .

10 per c e n t .

20 per cent _

30 per c e n t .

Two

One
15 per c e n t .

One.

One

i s per cent a n d 20
per cent.

One.

$5,000 t o $25,000

j

Stockholders' committee
examines
annually.

10 per c e n t .
20 per c e n t .

Probably 20 per cent

20 per c e n t .

20 p e r c e n t .

No

Probably y e s _

Double unpaid stock

A t least five

A t least five

Thirteen t o t h i r t y . _ .

Nine to fifteen

Five t o t h i r t y .

Majority citizens of
N e w Mexico; each
holder of 10 shares.

Hold xo shares of
stock.

Majority citizens of
N o r t h Dakota;
each holder of 10
shares.

Three-fourths residents of
Ohio; each holder of
5 shares.

Semiannually _

Probably semiannually.

Annually b y c o m m i t t e e .

Hold 5
stock.

Semiannually.

S e m i a n n u a l l y by
committee.

Yes

Yes—

Yes-

Yes-

Yes..

Yes.

Probably y e s _

Two.

Two .

Four

Four

Five

,

Probably y e s

Yes—

Yes
Yes

Four..

Four

20 per cent of m a tured obligations.

__

15 per c e n t .

Individual borrower's liability limited t o what per cent
of capital.'

See pages 61 and 70.

20 per c e n t .

Loans on corporation's own stock forbidden / . .

Yes.

All-

20 per cent-

10 per cent unless
a m p l y secured.

One-half -

Three-fourths.

Two-thirds.

Three-fifths;
one-half.

Three-fourths.

One-third.

shares

of

j Probably y e s .

25 per c e n t .

One.

Apparently seven .

Two.

One.

A t supervisor's discretion.

Two.

15 p e r c e n t .

See pages 352 and
362.

First liens o n l y .

Yes
Yes-

No. 3a.

Yes

Five to t w e n t y - f i v e . . , A t least three

Yes.

-i Y e s

Yes—

.. Yes

Yes

Prohibited .

Allowed o n increase
of capital, e t c .

Allowed.

< Where more than o n e figure i s given i n answer t o t h e question, i t i s generally because t h e statute provides different rules for corporations in communities of different
*
sizes. I n reserves, t h e difference i s sometimes t h a t b e t w e e n a reserve depository and a corporation n o t authorized t o receive reserves of others o n deposit.
b S e e page 58 for t h e impossibility of summarizing Arkansas.
« The confused condition of t h e Louisiana statutes has m a d e a summary of savings bank and trust c o m p a n y provisions seem unprofitable; see page 205 of t h e digest.
A T h e reports a n d examinations here tabulated are only t h e regular reports t o state officials a n d t h e regular examinations b y state officials
T h e number given
is usually t h e m i n i m u m per year; m a n y States provide for special reports a n d examinations a t the discretion of t h e supervisor.

Yes.

! Yes

I Yes

Apparently allowed._ i

Restricted b y l o c a - !.
tion and capital. >

One branch in h o m e
city.

_
...

Forbidden-

Like national b a n k s .

Two

Five.

Annually.

I n part-

$50,000.

$25,000 t o $100,000

$100,000...

AU.

All.

All.

xo per cent _

xo per c e n t

50 p e r c e n t .

20 per c e n t .

20 per c e n t . . . . —

20 per c e n t

Yes.

Yes.

Yes

Yes-

Yes_

Five to twenty-five..

A t least five- _ . . . . . .

Seven to thirty.

A t least three.

Five t o nine

Majority residents of
S o u t h Dakota;
each holder of 5
shares.

Stockholders; a m a jority citizens of
Texas.

Majority citizens of
V i r g i n i a ; each
o w n s $x 00 of stock.

H o l d xo shares of
stock.

Stockholders;
majority residents of
Wisconsin.

Citizens of United
States;
majority
residents of Wyoming: each holder
of certain stock.

All.

15 per c e n t . .

Probably 20 per c e n t .

Yes..

One.

A t supervisor's discretion.

Two.

..

j $50,000 t o $100,000;
m a x i m u m , $5,ooo.ooo.

1 a

$10,000 t o $100,000— ( . .3

50 per c e n t .

7$a* per c e n t .

Two.

Four .

Four..

Two .

One

Four..

,

Two.

Yes-

Yes.
Yes

Yes-

Two.

Four

Five.

Four..

One.

One.

25 p e r c e n t .

E v e r y 6 years .

One.

Two

Two.

One.

A t supervisor's discretion.

One.

Probably t w o - f i f t h s . . 3 per cent of demand; 2
per c e n t of t i m e .

One-third . .

One-third of d e m a n d
reserve.

15 per c e n t .

Two-fifths...

Four-fifths..

Three-fifths.

None; o n e - t h i r d ;
and one-half.

Three-fifths.

I Probably three-fifths . 15 per c e n t of all, m i n u s
6 per cent of demand
and 4 per c e n t of t i m e .

Two-thirds _

All n o t held i n cash
or b o n d s .

Three-fifths .

Yes-

25 per c e n t and 40
per c e n t (see page
463).

xo per c e n t .

Probably y e s -

Probably y e s

Probably only
liens, e t c .

Yes

Yes

Yes.

Yes

Probably y e s .

30 per c e n t .

25 per cent w i t h e x ceptions.
Yes.

Yes.

Yes-

Yes

Yes

Yes.

Yes.

Yes

|Yes.

Apparently a l l o w e d . .

Apparently a l l o w e d .

Forbidden t o officers
directors, e t c .

first

Probably y e s

Yes

Prohibited .

All.

xo per c e n t with e x ceptions.

15 per cent w i t h e x ceptions.

Apparently allowed

Allowed in h o m e c i t y
o n increasing c a p ital, e t c .

Yes

Yes

25 per c e n t .

Yes
Yes

. . . Yes

First mortgages o n
U t a h land, w o r t h
twice t h e loan.

All.

IAll.

20 per c e n t .

20 per c e n t .

Yes-

Yes

Yes.

First liens on land
worth twice the
loan.

/ T h e limitations o n a bank holding its o w n stock, either as collateral or outright i s commonly subject to t h e proviso that t h e stock m a y be held if i t i s necessary t o
take i t t o prevent loss o n a debt previously contracted o n security thought adequate a t t h e time; t h e statutes allowing stock t o b e thus taken usually require i t t o b e
sold within a certain t i m e — s i x months, a year, etc.
a For a typical limitation o n real estate holding, see the provisions of t h e Michigan statutes o n page 302.
A B a n k s i n Tennessee apparently d o all t h e trust business done i n t h e State. See Table for b a n k s .

Allowed if capital i n increased.

No. 3c.

Yes

I Yes-

Yes
Limited t o s per c e n t
of deposits.

Forbidden.

_.

Yes.

Yes..

Apparently allow<jd-

Allowed

Yes.

First lien; loan n o t
t o exceed threefifths value of land,
etc.

Query.

Yes..

YesYes.

Apparently allowed,
except t o officers,
etc.
Allowed if capital ;
increased.
i

5 per cent of d e posits, etc. (see
page 670).

Yes-

Yes

Forbidden t o officers
directors, e t c .

15 per c e n t .

Yes.

One-half capital and
one-half deposits
m a y be s o loaned.

_
_

Three-fifths

Loans, ten t i m e s .

Limited i n amount, e t c .

J Yes _

All.

Yes.

Deposits, t e n t i m e s .
Restricted (see pages
464 and 485).

_

Two-fifths

One-third of b o t h d e m a n d and t i m e reserves.

Probably 15 per cent -1

Yes

20 per c e n t .

Yes..

Biennially.

20 per c e n t . . — . . .

Four.

.....

10 p e r c e n t .

Two-fifths. . .

10 per c e n t .

Yes..

Semiannually by
committee of directors or stockholders.

15 per cent and 25
per cent.

15 p e r c e n t .

xo per c e n t - _ .

Yes—

Yes

Yes-.

Yes-

Yes-

25 per c e n t .

All; two-thirds; a n d
one-half.

30 p e r c e n t .

...

x 5 per c e n t .

15 p e r c e n t . .

Yes..

Savings
deposits
every 5 years.

Two-fifths.-

e The provisions restricting individual liability v a r y greatly, a s will appear o n reference t o t h e body of t h e digest. T h e per cent i s sometimes of capital, sometimes of paid-in capital, sometimes of capital and surplus, etc. Liability of a n individual firm or corporation frequently includes t h e liability of members. Commonly,
liability i s n o t considered increased b y t h e discount of bills of exchange drawn i n g o o d faith against existing values, nor b y t h e discount of commercial paper actually
owned b y t h e person negotiating it. Where there are still further exceptions (as if the p e r cent m a y b e exceeded in t h e case of secured loans) t h e table aims t o suggest i t s
incompleteness.

No. 36.

Yea..

Yes-

15 per cent and 25
per cent.

Two.

Probably o n e .

Yes
Yes

Yes.

Largely .

Yes..

Four..

Four

Hold xo shares of
stock.

Yes-

One-fifth. __

First liens on Montana realty.

Only forbidden t o
officers, directors,
etc.
Prohibited .

_

Yes

Loans, eight t i m e s .

Yes

Yes

Yes

Quarterly.

Yes.

15 per c e n t ; and xo
per c e n t .

15 per cent _.

Yes

Yes-.

Yes..

Yes-

A few provisions.

Quarterly .

3 per cent of d e m a n d ; 2
per c e n t of time.

Yes-

Yes..

YesYes—.-.

Hold $500 of s t o c k . . .

Two-thirds.

All-

Loans, ten times _

Yes.

Yes..

to

Permitted if capital
increased.

Branches.,

Three-fourths .

Restricted..

Yes.

Only forbidden
officers.

and

See pages 352 and
363.

First liens o n Color a d o real estate
only.

R e a l estate holdings limited?
.

Yes-

Yes...

One-third __

One-fourth

10 per cent t o 25 per
cent unless secured,
etc.

B o t h , t e n times .

T o t a l loans or deposits restricted t o w h a t proportion
t o capital.

Corporation forbidden t o purchase i t s o w n stock / .

20 per cent .

Yes.

Yes

Must be stockholders . Hold $500 of s t o c k .

Yes.

One-fifth.

All.

Yes-

..

Two-fifths; and onehalf.

One-fourth

Yes..
Yes..

No...

6 months..

10 p e r c e n t .

Yes-

Hold 5 t o 10 shares
of stock, e t c .

Yes..

One

Yes..

A t least five.

All.

Biennially.

Two.

Wyoming.

Wisconsin,

West Virginia.

6 months

10 per c e n t .

Washington.

Virginia.

Vermont.

Briefly . .

In so far a s they d o
banking business.

Reported t o commissioner every three
years.

One-half.

One-fifth.

Reserve: W h a t fraction m a y b e in securities..




No

I n some m a t t e r s .

I n certain respects .

$50,000 and $ 1 0 0 , 0 0 0 .

15 per c e n t .

15 per cent or 20
per cent.

(To follow page 39.)

Yes.

In p a r t . .

Majority residents of
county; each
holder of specified
a m o u n t of stock,
etc.

A t supervisor's discretion.

Four .

One.

Utah.

Texas.

Yes

10 p e r c e n t

' Four..

Tennessee.*

Probably y e s - .

Yes_

Three t o thirteen

Yes

Yes-

South Dakota.

Yes.

Quarterly.

Stockholders; a m a jority citizens of
Montana.

Yes.

Yes-

Yes-

South Carolina.

No

10 p e r c e n t .

Reserve:« W h a t per cent of all d e p o s i t s . .

S. Doc. 353, 61-2.

All.

No

15 per cent

Overdrafts forbidden

All.

20 per c e n t .

20 per cent

Quarterly.

Rhode Island.

Probably y e s . .

Yes

$100,000 and $25 0,000

$100,000.

10 per c e n t .

Probably y e s ; see
page 360.

Yes

25 per c e n t .

Reserve:° W h a t per cent of time d e p o s i t s .

Loans o n real estate restricted

Yes
W i t h respect t o s u pervision, e t c .

10 per cent

20 per c e n t .

Stockholders' committee
examines
annually.

Pennsylvania.

Oregon.

Probably 5 m o n t h s . .

Yes—

2 y e a r s ; see page 381.

No

Majority residents of
Massachusetts;
each holder of t o
shares, etc.

Oklahoma.

All

20 per cent

Annually.

One.

$100,000; 50 per cent -

Yes

.

Stockholders;
citizens of Maryland.

..J

Biennially.

Two.

50 per cent of subscribed capital.

! $200,000

Ohio.

North Dakota.

North Carolina.

$100,000 t o $500,000.,

25 per cent-

N o t fewer t h a n s i x . .

Yes..

$10,000 t o $50,000.,

Yes.

25 per cent.

Majority citizens of
I n d i a n a ; each
holder of 10 shares.

Yes. .

$100,000; maximum,
$10,000,000.

t o per cent

xo per c e n t .

H o l d $ 5 0 0 of s t o c k .

Yes..

$100,000; maximum,
$10,000,000.

New Mexico.

N e w Jersey.

I n respect t o reports,
examinations, e t c .

6 months

A t least five

Yes.—

Yes..

All-

H o l d a t least z share
of stock.

Yes...

NoYes..

50 per cent

• $50,000 t o $ 3 0 0 , 0 0 0 . J

F i v e t o fifteen .

Yes.-.

No.
No.

All

—

N i n e t o thirty

Yes . .

—.

In part.

All

Stockholders; onehalf citizens of
District of Columbia.

Semiannually.

Yes.

I n respect t o supervision, e t c .

$100,000-

xo per cent.

!

Yes..

$150,000 t o $300,- ! $200,000; maximum,
0 0 0 ; maximum, j
$2,000,000.
$5,000,000.

--j x year.

50 p e r c e n t
Yes.

Practically n o . .
Yes

$100,000 „to $200,0 0 0 ; maximum,
$1,000,000.

Yes

Yes-

Yes

$35,000 t o $150,000; j $50,000 t o $300,000;
maximum, $1,000,- j
m a x i m u m , $500,000.
:
000 t o $2,000,000.
.

New Hampshire.

In some matters

Ycs-

Ycs-

I n part; see page 236.

Yes .

Supervisor m a y take possession in insolvency, e t c . .

.

, 50 per c e n t .

Nevada.

Nebraska.

Mississippi.

Minnesota.

Michigan.

Massachusetts.

Yes

Yes.

N o t fewer than three.

Supervisor m a y sue for a receiver

s o per c e n t .
6 months

Yes-

Yes-

No

Annually.

See page 6 3 -

Maryland.

Maine.

Yes..

$25,000 t o $100,000;
m a x i m u m , $2,000000.
over

Louisiana. *

Three-fourths m u s t
be residents of
Connecticut.

Yes...

Double liability of stockholders

Yes-

Yes-

$35,000; perhaps also
same requirement
as for banks.

20 p e r c e n t .

2 5 percent—

8

Kentucky.

In part

5 months.._

10 per c e n t . .

Until what per c e n t o f capital

Very briefly.

Yes..

10 per c e n t .

W h e n remainder must b e paid
Surplus: P e r cent of n e t profits t o b e d e d u c t e d .

Yes-

If t h e y d o banking
business.

O n e year

5

7

to

Yes..
Yes-

No.

No..

Yes

Kansas.

Indiana.

Illinois.

Idaho.

Georgia.

Florida.

District of Columbia.

j Yes-.

Allowed for 90 d a y s . !

Forbidden.

x6




STATE BANKING STATUTES.
ALABAMA.
Article XIII of the constitution of Alabama, entitled
" Banks and banking," contains provisions dealing chiefly
with note issues, redemptions, etc. The Code of Alabama,
which includes all statutes passed prior to the end of the
1907 session, deals with the subject of banks in three articles of the chapter (No. 69) on " Corporations.'' There are
articles in this chapter also, concerned with mutual aid,
benefit, and industrial companies, building and loan associations, etc. The three articles really concerned with
banking are: (9) General provisions as to banks and
banking; (10) Regulation of trust companies; and (11)
Examination and regulation of banks. There is no legislation dealing specifically with savings banks, but by section
3561 the provisions of article 11 are made to apply " t o all
banks except national banks, and to all trust companies
and individuals doing a banking business, whether incorporated or not." All the legislation, therefore, for which sections in the code from 3538 to 3561, inclusive, are cited,
applies according to the terms of section 3561. These sections, together with a few others, are accordingly grouped
in the first division of this summary of Alabama, as bearing upon all banking institutions, including savings banks,
and trust companies that are engaged in banking. Under




41

National

M o n e t ar y

Commission

t h e second division, headed ' 'Trust companies," are merely
inserted those provisions of the statutes which deal with
trust companies. The citations where they are simply
numbers in parenthesis are references to t h e Code of 1907.
Mr. T. J. Rutledge, state bank examiner of Alabama,
assured t h e compiler, in a letter dated May 31, 1909, t h a t
at t h a t date there had been no banking legislation subsequent t o the material included in the digest.
GENERAL PROVISIONS.
I . — T E R M S OF INCORPORATION.

Banks doing business in Alabama, if in towns of more
t h a n 2,500, must have a capital of not less t h a n $25,000
actually paid in and employed in the business; if in smaller
towns the capital m u s t be not less t h a n $15,000 (3542).
For combining banking with trust business, see VI,
below.
I I . — L I A B I L I T Y OF STOCKHOLDERS.

No stockholder in any corporation is individually liable
for more t h a n t h e unpaid stock owned by such stockholder
(3468, and constitution, sec. 236).
III.—SUPERVISION.

The officer of t h e State whose duties are concerned simply with banks is t h e state bank examiner. H e must be a
competent and experienced accountant and m u s t have no
interest, either pecuniary or as an officer, in any b a n k
subject to this s t a t u t e or in any national bank. His salary is $2,000. His term of office is the same as t h a t of t h e
state treasurer (3549). Information had on examination,
etc., m u s t not be disclosed except in the course of d u t y
(3553)-




42

A lab a ma

—

General

Provisions

If t h e treasurer finds t h a t a b a n k is not in a solvent
condition, he reports the fact to the governor, who institutes proceedings for a receivership (3560).
REPORTS.

All banking institutions in the State report to t h e state
treasurer not less t h a n twice yearly according to the form
prescribed by him (3538). These reports exhibit in detail
and under proper heads the resources and liabilities of each
b a n k on any past day, specified by t h e treasurer, and not
more t h a n three days prior to the issue of the call for the
report b y the treasurer. The day for reports m u s t be uniform throughout t h e State. The b a n k must transmit its
report to the treasurer within five days after receiving his
request. The report is published once in a local newspaper
(3539)- The treasurer m a y call for special reports from
any particular b a n k in his discretion (3540). State depositaries report daily and monthly to the state treasurer
(647).
F r o m his reports during the year the state bank examiner constructs an annual report, which is published by the
state treasurer as a p a r t of the treasurer's annual report to
t h e governor (3557). The report of the examiner and the
treasurer's report to the governor m a y always be seen at
the treasurer's office (3558). If any annual report of the
state bank examiner is deemed of sufficient importance to
t h e public b y the governor, he m a y require the report to
be published in newspapers (3559).
EXAMINATIONS.

The bank examiner visits all banking institutions once
each year, and twice if it is practicable. The visits are not
at stated times, and the bank must not know when they
will occur. The examiner carefully and thoroughly exam-




43

National

Monetary

Commission

ines the affairs of the bank and reports to the treasurer
immediately. His report covers all the subject-matter
that the law requires banks to report upon and such other
subjects necessary for the protection of depositors and
stockholders as the state treasurer requires. The state
treasurer may require an examiner to visit any bank whenever he thinks public interests so demand (3552). The
examiner is prohibited from receiving fees from banks
(3551). He may disclose information had upon examination only to the state treasurer (3553). He must
never report any list of names of depositors or amounts of
deposits (3554)IV.—RESERVE REQUIREMENTS.

No bank, person, firm, or corporation doing a banking
business may reduce its cash on hand below 15 per cent of
demand deposits, but three-fifths of the 15 per cent may
be in the shape of balances due from other banks and
bankers (3543)V.—DISCOUNT AND LOAN RESTRICTIONS.

Loans to any individual, firm, or corporation are limited
to 10 per cent of the capital, surplus, and profits of the
lender, unless the loan is amply secured by good collateral,
or is approved by a majority of the board of directors of
the corporation making the loan (3547).
Loans must not be made to any salaried officer, agent,
or employee of the bank, person, firm, or corporation
making the loan, unless good security is furnished (3546).
If losses impair the capital of a bank, the shrinkage is
chargeable to profit and loss, so that the notes and bills
discounted and the loans made, shown as debts due the
bank, may be collectible assets (3548).




44

Alabama

— General

Provisions

VI.—INVESTMENTS.

Corporations doing a banking business m a y buy and
sell stocks, bonds, etc.; lend money on personal security
or upon pledges of bonds and stocks; take security, by
mortgage or otherwise, on property, real and personal;
become trustees for any purpose; be appointed and act
as executors, administrators, guardians, and receivers;
and do any business and exercise any powers incident to
the business of trust and banking companies doing a banking business (3518).
X.—UNAUTHORIZED BANKING.

No foreign corporations invested with the privilege of
banking m a y exercise it by agent in this vState, except by
t h e exclusive use of United States currency (3525).
XI.—PENALTIES.

The penalty for failing for thirty days after notice to
make good impaired reserve is $25 for each day after the
expiration of t h e thirty (3545).
Any b a n k failing without satisfactory reasons to furnish a report when requested by t h e treasurer forfeits $50
(354i).
Any b a n k examiner who receives fees from a b a n k doing
business in Alabama is guilty of a felony punishable by
imprisonment from one to five years. The person, firm,
or corporation offering the fee is similarly punishable
(6362).
If t h e b a n k examiner reports a list of depositors he is
guilty of a misdemeanor which is punishable b y fine not
exceeding $1,000 and he is also liable to the person, firm,
or corporation whose affairs he has disclosed in t h e penal
sum of $1,000 (3555)-




45

National

Mon

etary

Commission

Withholding demands upon banking institutions in order t o accumulate enough to induce a run is a misdemeanor, for which t h e penalty is from $500 t o $2,000
(6361).
T R U S T COMPANIES.
I . — T E R M S OF INCORPORATION.

Corporations operating as t r u s t companies m u s t have
the word " t r u s t " as p a r t of their corporate names, are
amenable t o t h e banking law, and are examined like state
banks (3528).
I n cities of 5,000 inhabitants or less, trust companies
m u s t have a paid-up capital of not less t h a n $25,000; in
cities from 5,000 t o 30,000 t h e capital must be not less
t h a n $75,000; and in cities of over 30,000 it m u s t be not
less t h a n $100,000 (3529).
III.—SUPERVISION.

Trust companies are allowed to deposit with the state
treasurer securities of certain prescribed sorts which are
used to secure t h e p a y m e n t of liabilities of t h e company
in fiduciary capacities and to exempt t h e company from
giving bond (3531 et seq.). T r u s t companies are examined as s t a t e banks are (3528).
X . — U N A U T H O R I Z E D T R U S T COMPANY B U S I N E S S .

No corporation which is n o t organized as a t r u s t comp a n y or as a b a n k or as a combined b a n k and t r u s t company, and which has not complied with t h e statute, m a y
use " t r u s t " as p a r t of its name, nor m a y any partnership
use t h e word " t r u s t " (3530). Corporations t h a t employ
t h e word " t r u s t " illegally as p a r t of their n a m e thereby
make their incorporation void and m a k e their members
liable as partners (3530).




46

ARIZONA.
The most recent compilation of the laws of t h e Territory
of Arizona is the Revised Statutes, 1901. The session
laws have been examined through 1909. T h e legislation
on t h e topics covered by t h e digest is contained, apart
from amendments in the session laws, chiefly in chapter 7
of title 1 of the Revised Statutes, "Territorial A u d i t o r , "
and in chapter 6 of title 13, "Savings and Loan Corporations. " The contents of this latter chapter are digested
under "Savings b a n k s ; " t h e companies with which t h e
chapter deals are defined as "corporations organized for
the purpose of accumulating and loaning the funds of their
members, stockholders, and depositors'' (828, amd. by
1903, chap. 86). Most of the provisions in the chapter
on the territorial auditor apply in terms to " every building
and loan society or association, savings bank, bank, and
banking c o m p a n y ; " these provisions are digested fully
under " B a n k s , " and are merely referred to under "Savings
b a n k s . " The heading " T r u s t companies" is omitted
from the digest, since such corporations are mentioned only
in one section, 131 of the Revised Statutes, which provides
for the annual examination of every bank, savings bank,
" o r any trust company receiving any valuable thing in
trust, or money on special deposit." I t is possible, of
course, t h a t trust companies might be brought within t h e
general expressions " b a n k i n g corporations," etc., b u t




47

National

Monetary

Commission

since there is no special legislation with respect to them
(except chapter 31 of 1903, which makes certain provision
for fiduciary business), a separate heading including such
sections as might inferentially be made applicable to trust
companies seems of little value. The references, where
they are simply numbers in parenthesis, are to sections
in the Civil Code in the Revised Statutes of 1901; later acts
are cited by year and chapter.
BANKS.
III.—SUPERVISION.

The auditor of the Territory (an official appointed by the
governor for terms of two years, with a salary of $1,000—
107 and 109) is by virtue of his office bank comptroller of
Arizona (129). If on examination of the affairs of any
corporation, firm, or individual doing the business mentioned in the chapter on the territorial auditor (the chapter mentions banks, savings banks, and building and loan
societies repeatedly; refers in section 131 to trust companies receiving valuable things in trust or money on
special deposit; and in section 138, amended by 1909,
chapter 90, declares that "the terms bank or bankers
whenever used in this law are intended to include all persons, firms, or individuals receiving deposits, buying or
selling exchange, or doing any other kind of business as
bankers ") the bank comptroller finds the bank has violated any law of the Territory or is conducting its business
unsafely, he orders a discontinuance of the practices and
conformity with the requirements of law and with safety
in its transactions; in case of a failure to comply with his
order, and whenever it appears to him that it is unsafe for
any bank to continue its business, he must then imme-




48

Arizona

—

State

Banks

diately t a k e possession of the business of t h e bank and all
its property. H e notifies the governor and the attorneygeneral, who causes suit to be instituted t o enjoin t h e institution from the transaction of any further business. If
the court then finds t h a t it is unsafe for t h e business t o be
continued or t h a t the bank is insolvent, the comptroller
surrenders possession t o a receiver, who winds u p the
affairs of the bank (139, arnd. by 1907, chap. 96, 1). The
bank comptroller m a y proceed in t h e same way against any
bank which, after having purchased its own stock under
t h e law, fails to dispose of it within six months (1907,
chap. 96, 3). H e m a y revoke the license of any bank
which, having neglected to furnish a report, fails t o pay
t h e s t a t u t o r y penalty (1907, chap. 96, 4). H e approves
of reserve depositories, and may declare any bank which
fails to maintain its reserve insolvent (138, amd. by 1909,
chap. 90).
REPORTS.

The b a n k comptroller, not less t h a n once a year and as
often as he thinks necessary, without previous notice,
requires every "savings bank, banker, or banking association or corporation" to report its condition (130).
Every "savings bank, bank or banking corporation"
makes not less t h a n three reports to the comptroller
every year, showing the actual financial condition of the
bank at t h e close of business on a past day specified by
t h e comptroller; t h e report includes a statement of the
amount of capital stock, names of directors, number of
shares held b y directors, amount paid in in money by
stockholders for capital, amount of reserve, a m o u n t due
depositors, and amount and character of liabilities, particulars with respect to real estate held, amount loaned
on real estate, with details, amount invested in bonds,
with details, amount loaned on stocks and bonds, with
S. Doc. 353, 61-2




4

49

National

Monetary

Commission

details, amount loaned on other securities, with details,
a m o u n t of money on hand or on deposit and where deposited, and a statement of other assets not included in
the above list (136). These reports must be t r a n s m i t t e d
to the comptroller within ten days after the receipt of his
request, unless he designates a shorter time; they m u s t be
published in a local newspaper (137). Receivers of insolvent banks report to t h e comptroller as solvent b a n k s
do (139, amd. b y 1907, chap. 96, 1).
The bank comptroller reports annually to t h e governor
a synopsis of reports received from all t h e institutions
under his control, together with any other proceedings
had by him, t h e general condition of banking and savings
banking in t h e territory, etc. (130). After every examination he reports t h e condition of t h e examined institution to t h e attorney-general (131). At each legislative
session he reports t h e business of his office to t h e legislat u r e (141). " T h e semiannual reports provided for" are
kept on file at his office and open to public inspection (142);
all his books and records are open to public inspection
(i44)EXAMINATIONS.

The bank comptroller or some person appointed b y him
must, at least once in each year and as often as he deems
it necessary, without previous notice, visit and thoroughly examine each b a n k and savings b a n k " or any t r u s t
company receiving any valuable thing in t r u s t or money
on special d e p o s i t " ; he inspects books, papers, etc., and
all securities, to ascertain t h e condition of the corporation, its solvency, etc. (131). I t is the d u t y of t h e comptroller to examine the condition of the affairs of every
b a n k in liquidation in the same way he examines solvent
banks (139, amd. by 1907, chap. 96, 1).




50

Arizona

—
IV.—RESERVE

State

Banks

REQUIREMENTS.

" E v e r y bank, banker, or banking association, except
savings b a n k s , " m u s t keep on hand in lawful money of
t h e United States 15 per cent of t h e aggregate amount of
its deposits and of any sums or amounts owing on account
of money borrowed; of this reserve two-fifths m u s t be in
cash and three-fifths on deposit with other banks approved by t h e comptroller. If a b a n k fails to keep the
reserve as required the comptroller m a y prohibit it from
transacting further business and declare it insolvent (138,
amd. by 1909, chap. 90).
\.—DISCOUNT

AND L O A N R E S T R I C T I O N S .

Among t h e matters required to be reported are amounts
loaned on real estate, amounts loaned on stocks and bonds,
and amounts loaned on other securities (136).
No bank m a y loan or discount on t h e security of shares
of its own stock unless accepting such security is necessary t o prevent loss of a previous debt, in which case t h e
stock so acquired m u s t be sold within six months from
its acquisition (1907, chap. 96, 3).
For provisions whereby territorial banks m a y become
depositaries of public moneys, see 3770 et seq. and amendments of 1905, chapter 56; also 1909, chapter 96.
VI.—INVESTMENTS.

Among t h e items required to be reported are " t h e
amount a t which t h e lot and building occupied by t h e
bank for t h e transaction of its regular business stands
debited on its books, together with the market value of
all other real estate held, whether acquired in settlement
of loans or otherwise," with details, and " t h e a m o u n t
invested in b o n d s " (136).




51

National

Monetary

Commission

No bank m a y purchase shares of its own stock unless
the purchase is necessary to prevent loss on a previous
debt, in which case t h e stock must be sold within six
months from its purchase (1907, chap. 96, 3).
VIII.—BRANCHES.

Branches are apparently allowed, for t h e section prescribing compensation for examinations includes t h e sum
which t h e comptroller is entitled to receive "from each
branch or agency of a bank " (140).
X.—UNAUTHORIZED BANKING.

No corporation, firm, or individual m a y use t h e n a m e
or transact t h e business of a "savings b a n k or b a n k or
banking corporation" without t h e comptroller's license.
A violation of this provision entails a penalty of $100 per
day during t h e continuance of the offense; any person
who in any manner attends to such business as manager,
agent, etc., forfeits $100 per day also. Any violation of
this provision is a misdemeanor (134).
XI.—PENALTIES.

Whoever refuses to testify before the b a n k comptroller
or his subordinate in the discharge of his duties is guilty
of a misdemeanor punishable by fine not exceeding $5,000,
imprisonment not exceeding one year, or b o t h fine and
imprisonment (132). If t h e comptroller has knowledge
of t h e insolvency or unsafe condition of a bank and neglects to report to the attorney-general he is punishable by
a fine of from $5,000 to $10,000, imprisonment for from
one to two years, or both fine and imprisonment; his office
is vacated by t h e offense (133). If any officer or employee of a b a n k or any other person fails to comply with
the provisions relative to dissolution of an insolvent b a n k




52

Arizona

— Savings

Banks

or refuses to obey the directions of the bank comptroller
in dissolution proceedings, he is guilty of a misdemeanor
punishable b y fine not exceeding $300, imprisonment not
exceeding six months, or both (139, amd. by 1907, chap.
96, 1). If any bank fails to furnish the comptroller,
within the time specified, with a report required by him,
it forfeits $100 per day during the default; failure t o pay
t h e penalty is cause for revocation of license to transact
business (1907, chap. 96, 4). There is a Penal Code provision making it a misdemeanor for an officer, agent,
teller, or clerk of " any bank " to receive deposits knowing
t h a t t h e bank is insolvent (Penal Code, 506).

SAVINGS BANKS.
I . — T E R M S OF INCORPORATION.

I t is hinted t h a t savings banks m a y be incorporated
without capital stock; one section reads: " W h e n savings
and loan corporations have a capital stock specified in
their articles of incorporation, certificates of the ownership of shares m a y be issued" (829). Another section
requires " t h e directors of any such corporation having
no capital s t o c k " to retain on each dividend day at least
5 per cent of net profits to constitute a reserve fund,
which m u s t be invested like other funds of the corporation
and used to pay losses. A savings bank may provide by
its by-laws for the disposal of any excess reserve fund
over $100,000 and the final disposal of the fund (834).
The directors of savings banks m a y declare dividends of
so much of t h e net profits and of the interest arising from
the capital stock and deposits as may be appropriated
for t h a t purpose under the by-laws and under the agreements with depositors. Depositors have priority over
stockholders upon t h e assets of a savings bank, " b u t t h e




53

N at ion a I Monetary

Commission

by-laws may provide t h a t t h e same security shall extend
to deposits made b y stockholders" (830).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

There is no especial provision for stockholders' liability
in savings banks.
The directors must not contract any debt or liability
against the corporation for any purpose except deposits
and for necessary current expenses of conducting business (830). See also V, infra, for further restrictions on
borrowing by directors (835, amd. by 1905, chap. 13).
III.—SUPERVISION.

T h e bank comptroller exercises the same authority over
savings banks t h a t he does over banks (129 et seq.).
Savings banks seem clearly within the provisions of t h e
statutes on procedure for a dissolution. (See Banks, III.)
REPORTS.

See this heading under Banks. The section of the
Revised Statutes making it a d u t y of the bank comptroller
to call for a report at least annually, includes savings
banks in terms (130). So also does t h e section requiring
t h e comptroller to report to t h e attorney-general after each
examination (131); t h a t requiring not less t h a n three
reports a year including specified items (136); and t h a t
requiring publication of the report (137). T h e provision
requiring receivers to report to t h e bank examiner is
applicable t o receivers of savings banks, since t h e section
covers t h e dissolution of " a n y corporation, firm, or individual doing business as mentioned in this chapter " (1907,
chap. 96, 1, amending 139). (See Banks for t h e various
reports made by the comptroller.)




54

Arizona

— Savings

Banks

EXAMINATIONS.

Savings banks are mentioned in the section digested
under Banks requiring t h e comptroller, or a person
appointed b y him, to make a full examination at least
annually (131). The requirement t h a t he examine the
condition of banks in the hands of receivers in t h e same
manner in which he examines solvent banks applies to
" a n y corporation, firm, or individual doing business as
mentioned in this chapter," thus clearly including savings
banks (1907, chap. 96, 1, amending 139).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

No savings bank m a y receive a license from t h e bank
comptroller unless at least 50 per cent of its loans are
secured by first mortgage or other prior liens upon real
estate in Arizona, the loans when made not to exceed 60
per cent of t h e market value of the security, except when
made for the purpose of facilitating the sale of property
owned by the bank. No savings bank m a y loan on mining
shares (135).
The directors of a savings bank " m u s t not contract
any debt or liability against the corporation for any purpose whatever, except for deposits and for the necessary
current expenses of conducting the business" (830). No
director or officer of a savings bank may, directly or
indirectly, borrow t h e deposits or other funds of t h e bank
except upon real estate security having a market value of
at least one-third more t h a n the amount borrowed or (a
misprint in the statutes makes this provision doubtful)
upon the stock of the bank owned by the director, b u t in
no case m a y he borrow upon the stock more t h a n its cash
surrender value, nor m a y he become an indorser or security
for loans to others, or in any manner become an obligor for
moneys borrowed or loaned by the bank. Upon violation




55

National

Monetary

Commission

of this section the director's or officer's office becomes
vacant (835, amd. by 1905, chap. 13).
Savings banks m a y not loan except upon adequate
security on real or personal property or personal security
with a t least two sureties or indorsers; such loans m u s t
n o t be for a longer period t h a n ten years, and no loan m a y
be m a d e to one person, firm, or corporation t o an a m o u n t
exceeding $20,000 (828, amd. by 1903, chap. 86).
See 8S3 for provisions with respect to t h e issue of
transferable and nontransferable certificates of deposit.
VI.—INVESTMENTS.

No savings bank may invest its capital or deposits in
mining shares (135).
A savings bank m a y hold real estate only as follows:
The lot and building in which t h e bank's business is carried
on, the cost of which must not exceed $100,000, except
t h a t , on two-thirds vote of stockholders, t h e b a n k m a y
increase t h e holding to an a m o u n t not exceeding $250,000;
such as has been mortgaged t o it; such as has been purchased on foreclosure sale under mortgages for money so
loaned; and such as is conveyed t o it b y borrowers in
satisfaction of loans, the real estate acquired under t h e
last-mentioned circumstances being required t o be sold
within ten years. As to personalty, a savings b a n k m a y
hold only such as is requisite for its accommodation in
business, mortgages on real estate, bonds and securities,
gold and silver bullion, United States m i n t certificates,
and United States securities; no savings b a n k m a y hold
securities except bonds of the United States, Arizona, or
Arizona municipalities unless t h e bank has a capital stock
or reserve fund paid in of not less t h a n $100,000 (831).
VIII.—BRANCHES.

The section cited under Banks, V I I I , applies t o savings
banks also (140).




56

Arizona

— Savings

Banks

X.—UNAUTHORIZED BANKING.

The section digested under this heading in Banks is
applicable also to savings banks (134).
XI.—PENAI/TIKS.

See Banks, X I , for the penalty for failing t o testify
before the b a n k comptroller or his subordinate (132); for
the penalty upon t h e banking comptroller if he fails to
report t h e insolvency of a bank (133); for the penalty for
failing to comply with the provisions of t h e section
respecting dissolutions or to obey t h e directions of t h e
bank comptroller in pursuance of his power to dissolve
(1907, chap. 96, 1); and for t h e penalty for failing t o furnish the bank comptroller with any report requited b y
him (1907, chap. 96, 4 ) : in some of the above provisions
imposing penalties, savings banks are specifically mentioned, and in others they are included by reasonable
inference. The provision of the Penal Code making it a
misdemeanor for an officer, agent, etc., to receive deposits,
knowing t h a t t h e bank is insolvent, applies to " a n y b a n k "
(Penal Code, 506).
Particular savings bank penalties include the provision
which makes it a felony for any president or managing
officer to violate the provisions of 135, which withhold a
license unless 50 per cent of t h e bank's loans are secured
by first mortgage on Arizona real estate, which forbid
taking mining stock as security or investment, etc. (135);
and the provision which makes it a misdemeanor for any
director or officer to violate the s t a t u t e restricting loans
to officers or directors (835, amd. by 1905, chap. 13).
Also there is a provision in the Penal Code making it a
misdemeanor for an officer, agent, etc., to overdraw his
account knowingly and obtain money (Penal Code, 505).




57

ARKANSAS.
There is practically no banking legislation in this
State. A few scattering provisions appear in t h e revision
of statutes b y Kirby (1904): The most i m p o r t a n t are
on taxation, reports to t h e assessors, etc. (sec. 6919,
et seq.); others forbid banking by limited partnerships
(5803); m a k e a willful false report, with intention t o
deceive any person as to the condition of t h e bank,
punishable b y fine not exceeding $1,000 and imprisonm e n t not exceeding one year (1813); and forbid receipt
of deposits in insolvency, making it a felony on t h e p a r t
of any officer, director, etc., knowingly t o receive these
deposits, punishable by imprisonment of from three to
five years (1814). The session laws of 1905 and 1907
contain no banking legislation. In chapter 31 of the
revision, sections 887-891 deal with t r u s t and surety companies. The most important provisions of these sections are as follows: No share of stock m a y be of greater
face value t h a n $1,000 (887). The total paid-up capital must be not less t h a n $100,000 in a county of
more t h a n 50,000; not less t h a n $75,000 in a county of
40,000 to 50,000; and in no case less t h a n $50,000 (889).
Trust company powers do not in terms include t h e
power to do a banking business; they m a y "exercise
such powers as are usually had and exercised by t r u s t
companies,'' m a y " l o a n money upon real estate and




58

Arkansas
collateral security," and may "buy and sell all kinds of
government, state, municipal, and other bonds and all
kinds of negotiable and nonnegotiable paper, stocks,
and other investment securities" (888). So far as trust
company affairs are not covered by these few sections
they are governed by the laws of the State governing
banks; and trust companies are "subject to such examinations as banks are now or hereafter may be subjected
to by the laws of this State" (890)—but there is no
statute of the State subjecting banks to examination
at all. Although at the date of making this compilation
the 1909 session laws are not accessible, a reprint of the
corporation laws of Arkansas, published by authority of
the secretary of state and including all 1909 amendments,
contains no material except that digested above; it is
merely noted in the reprint that banks organize under the
laws applicable to manufacturing and other business
corporations.




59

CALIFORNIA.
A digest of the statutes of this State was prepared before
the session laws of 1909 were available; it consisted of provisions extracted with some difficulty from the four volumes of Codes (by Kerr), published in 1906, from the
General Laws (by Henning), published in 1905, and from
the later statutes and amendments to the Codes, including
legislation of 1906 and 1907. The legislature of 1909
passed a statute, chapter 76 of the 1909 laws, which consists of an article entitled "General provisions," one entitled " Savings banks," one entitled " Commercial banks,"
one entitled "Trust companies," and one entitled "State
banking department." The compiler of this digest has
been advised by William L. McGuire, esq., superintendent
of banks of California, that the new statute, in repealing at
section 146 "all acts or parts of acts in conflict with this
act," obliterates all the legislation previously in force.
The new statute does, indeed, cover completely the topics
treated by the digest; it is a well-drawn piece of legislation defining the three sorts of institutions sharply and
leaving little room for doubt to which of the three each
particular provision of the statute is applicable. The
advice of the superintendent of banks has, therefore, been
acted upon, to exclude from the digest all legislation except the 1909 statute. The compiler feels less confidence
in the correctness of this view, however, since a later stat-




60

California

— Statute

of

1909.

ute of the 1909 session, chapter 453, amends section 290a
of the civil code by altering slightly the provisions with
respect to t h e affidavit required to be made by t h e directors of a newly incorporated trust company t h a t certain
capital has been paid in before a certificate of incorporation issues.
The statute of 1909 defines " b a n k " to include all persons, firms, and corporations receiving money on deposit,
and divides banks into three classes, savings banks, commercial banks, and trust companies (2). The provisions
framed to apply to banks, therefore, and inserted in the
digest only once under "Banks, " m u s t be remembered to be
applicable to all three sorts of institutions; where t h e provisions digested under " B a n k s " apply only to commercial
banks, t h a t is indicated. The provisions of Article I I I of
the s t a t u t e , w h i c h is headed "Commercial b a n k s , " should
no doubt be taken as applicable to commercial banks exclusively. I t is to be noted, however, t h a t , although in
t h a t article t h e term "commercial b a n k " is usually used,
one or two provisions contain the language " e a c h b a n k , "
which, if the s t a t u t e is to be read literally, applies to all
three sorts of corporations, because in section 2 " b a n k " is
used to include commercial banks, savings banks, and
trust companies. All t h e provisions under Article V of
t h e s t a t u t e , " S t a t e banking d e p a r t m e n t , " are applicable
to all three sorts.
The references, where they are merely numbers in parenthesis, are to sections in chapter 76 of 1909.




61

National

Monetary

Commission

BANKS.
I . — T E R M S OF INCORPORATION.

Corporations m a y be formed under the statute, t o do
" a n y one or a l l " of t h e three sorts of businesses, savings
banking, commercial banking, and trust company business (3). Another section provides t h a t any corporation
m a y combine t h e business of " a commercial b a n k and savings b a n k and t r u s t company, or any or all of t h e m " (22).
T h e departments m u s t be kept separate (25, 26, and 27).
A b a n k doing a commercial business must include " c o m m e r c i a l " in its advertising, etc.; one doing a savings business m u s t use " s a v i n g s ; " and one doing a t r u s t business
m u s t use " t r u s t " (28). Before a bank begins business
or opens a new department, it m u s t obtain a certificate
from t h e superintendent (24).
T h e superintendent passes upon t h e character and fitness of t h e incorporators before issuing a certificate
authorizing t h e m t o begin business (128).
Every commercial bank must have a paid-in capital of
$25,000 (82). E v e r y bank doing a departmental business
m u s t have a capital paid up in cash of not less t h a n
$25,000 if it transacts both a commercial and savings
business, and not less t h a n $225,000 if it transacts b o t h a
commercial and t r u s t business, or both a savings and
t r u s t business, or a commercial, savings, and t r u s t business (23). Paid-up capital and surplus must always equal
10 per cent of deposit liabilities; deposit liabilities m a y
not be increased when this proportion is wanting (19).
The directors of any bank having a capital stock m a y
p a y dividends t o depositors and stockholders of so much
of t h e profits as m a y be appropriated for t h a t purpose
under t h e by-laws or under t h e agreements with depositors, b u t before a dividend is declared a t least one-tenth




62

California

— State

Banks

of t h e net profits for the preceding half year m u s t be carried to surplus, until it amounts to 25 per cent of paid-up
capital. The surplus may be converted into capital, in
which event surplus must be restored. Depositors have
priority upon t h e assets of t h e corporation over stockholders, b u t t h e by-laws may provide t h a t t h e same security shall extend to deposits made b y stockholders (21).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

There is a constitutional provision t h a t " e a c h stockholder of a corporation or joint-stock association shall be
individually and personally liable for such proportion of
all its debts and liabilities contracted or incurred during
the time he was a stockholder as the amount of stock or
shares owned b y him bears to the whole of t h e subscribed
capital stock or shares of t h e corporation or association."
(Art. X I I , sec. 3). No bank may make a contract with
its depositors whereby this stockholders' liability is
waived; any such contract is void (40).
To be a director, one must own shares of the market
value of at least $500. In banks "organized without
capital s t o c k " (there are a number of provisions framed
in this language which seem designed only for savings
banks) a director must be both a member and a depositor
of the b a n k (10). The directors must make annual examinations and report t h e results to the superintendent (see
III, infra).
III.—SUPERVISION.

There is a state banking department, of which t h e chief
officer is the superintendent of banks, appointed b y the
governor for terms of four years. The superintendent
must have h a d active banking experience, one-half of
which must have been had in California, and must not be




63

National

Mo n et ary

Commission

interested in the business of banking. His salary is
$10,000 a year (120). His deputy, attorney, clerks, and
examiners m u s t not be interested in banks in t h e S t a t e ,
and t h e deputy must have had at least three years' experience in a California bank. Neither the superintendent,
his deputy, nor an examiner may be in any way indebted
to a bank under his supervision or subject to his examination (121). The expenses of t h e department, including
salaries, are paid out of what is known as the state banking fund, to which each bank contributes such proportion
as its deposits bear to t h e aggregate deposits in banks subject to t h e supervision of the department (123). The
superintendent, before authorizing a b a n k to begin business, ascertains whether the character and general fitness
of t h e incorporators are such as to command t h e confidence of t h e community (128).
T h e superintendent notifies a bank or a trust company
whose reserve is below the requirement to make good the
reserve, and if it fails for thirty days to comply it is proceeded against as insolvent (20). When the superintendent has reason to believe t h a t t h e capital of a b a n k is
reduced below t h e requirement, he requires t h e deficiency
to be m a d e good within sixty days (133). If it appears to
him t h a t any bank has violated its articles of incorporation or any statute, he must direct t h e discontinuance of
t h e violation, or, if it appears t h a t a bank is conducting its
business in an unsafe manner, he must direct a discontinuance of t h e injurious practices. If, after a hearing,
he makes such an order final, and if, within ten days, t h e
b a n k has not secured an injunction against the enforcem e n t of t h e order and still fails to comply with it, t h e
superintendent m a y t a k e charge of t h e bank and liquidate
it (134). The provisions for t h e superintendent's taking
control and liquidating are elaborate. Whenever he has
reason to think t h a t a bank is in an unsound condition t o




64

California

— State

Banks

transact its business or that it is unsafe or inexpedient for
it to continue business, he may take possession and retain
possession until the bank resumes business or its affairs are
finally liquidated. He is given various powers and duties
with respect to collection of debts, appointment of special
deputies to assist in liquidating, proof of claims, enforcement of stockholders' liability, etc. (136). No examiner
may be appointed receiver of a bank which he has examined (125).
The superintendent has certain supervision over the sale
of the assets of one bank to another and the assumption
by the buyer of the seller's obligations (31); over the sale
by a director, officer, employee, or controlling stockholder,
to the bank, of a mortgage arising from the sale of real
estate made by a corporation in which such a director,
officer, employee, or controlling stockholder is interested—
this transaction is permitted only upon the superintendent's consent (35); and over branches, which he must
approve before they may be opened (9). The superintendent passes upon loans by commercial banks to their
directors (33).
The superintendent keeps a bulletin in his office on
which he posts weekly a detailed statement giving general
information in regard to the work in his department and
numerous items specified in the statute (141).
REPORTS.

The superintendent of banks calls for reports at least
three times a year, on the same days, if possible, as those
on which national banks report (131). Whenever required by the superintendent, every bank must report,
showing the financial condition of the bank at the .close
of a past day specified by the superintendent. The following items must be included: Amount of capital and
amount paid in; names of directors and shares held by
S. Doc. 353, 61-2




5

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Monetary

Commission

each; capital actually paid in in money; amount of contingent and reserve funds; amount due depositors; a m o u n t
and character of other liabilities; real estate held, with
particulars; a m o u n t loaned on real estate, with particulars ; bond investments; loans on stocks and bonds; loans
on other securities; money on hand or on deposit, and in
what depositories; other property held; other loans, deposits, and investments; and any other information requested by the superintendent (130). Banks conducting
a departmental business render a separate report for each
department (129). At the time a report is furnished
each bank publishes a condensed statement of its financial
condition in a local newspaper, showing loans, overdrafts,
investments in securities, amount due from banks, cash
items, cash on hand, capital, surplus, undivided profits,
amounts due other banks, deposits, certified checks,
etc. (132).
Every other year each bank reports to the superintendent the names of depositors who have not deposited or
withdrawn funds for ten years. These statements m u s t
show the a m o u n t of the account, the depositor's last
known residence, and the fact of death, if known. These
deposits must be noticed in a local newspaper (15).
The board of directors of every bank, at least annually,
and at intervals of not less t h a n three months, m u s t
examine t h e affairs of their bank, especially with a view
to ascertaining the value and security of its loans and discounts. The directors place a report of the examination
on file, which the superintendent of banks m a y examine.
This report must contain a statement of the assets and
liabilities of the bank, loans which are of doubtful value,
loans on collateral which are insufficiently secured, overdrafts, with especial reference to those which are doubtful,
and a full statement of whatever other matters affect t h e
solvency of the bank (139).




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— State

Banks

In the article on commercial banks and in a section
dealing apparently with commercial banks, it is provided
that "each bank" having a loan outstanding to any
director must report monthly to the superintendent details with respect to such loans (83).
Every year the superintendent of banks reports to the
governor, for submission to the next legislature, a summary of the condition of every bank subject to the control
of the superintendent, a list of new banks and of old banks
which have been closed, recommendations for amendments to the banking law, a list of banks in process of
liquidation, and details of the administration of the banking department (140). This report must include information with respect to deposits which have not been dealt
with for ten years (15).
For reports required of depositories of state funds, see
1907, chapter 50.
EXAMINATIONS.

The superintendent, his deputy, or some examiner
appointed by the superintendent, examines every bank
other than a savings bank twice a year, making inquiry
into the resources of the bank, its mode of conducting its
affairs, the action of its directors, its investments, the
safety and the prudence of its management, the security
afforded to its obligees, its compliance with law, and such
other matters as the superintendent prescribes. Examinations may be oftener if the superintendent thinks them
necessary. When, upon examination, an examiner finds
a bank holds securities which are of doubtful value, the
superintendent may employ appraisers to appraise the
securities (124). When the superintendent has ordered
impaired capital to be restored, he may cause a special
examination to be made to determine whether the deficiency has been made good (133). If a bank fails to




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Mon

etary

Commission

report, its affairs are immediately thoroughly examined
(138). There is a preliminary examination before a certificate to begin business or open any new department is
granted (24 and 127).
The board of directors of every bank examine it at least
once a year, and file in the bank a record of their examination, to which record the superintendent has access.
Items with respect to which this examination and report
are made are given above under Reports (139).
Any national bank receiving deposits of state banks
must submit to examination at the request of the superintendent. If the national bank refuses, then the superintendent notifies all state banks depositing in this particular
national bank to withdraw their deposits. Failure to
withdraw is a misdemeanor (48).
IV.—RESERVE REQUIREMENTS.

Every bank other than a savings bank must at all
times keep on hand in money an amount equal to 15 per
cent of its deposits, exclusive of state, county, and municipal deposits. Three-fifths of the reserve of any bank
other than a savings bank may consist of deposits in any
bank other than a savings bank. Banks which serve as
reserve depositaries must maintain a reserve of at least 20
per cent of deposits, exclusive of state, county, and municipal deposits. When reserves fall below the requirement, a bank must not make new loans or discounts except by discounting sight exchange and must not make
dividends from profits until the reserve is restored. The
superintendent notifies banks whose reserves are below
the requirement to make good the reserve (20). Banks
doing a departmental business maintain the statutory
reserve for each department separately. No department
may receive deposits of any other department of the same




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California

— State

Banks

bank (25). No bank may deposit any of its funds in any
other bank unless the depository has been designated as
such by vote of a majority of the directors of the depositing bank, exclusive of the vote of any director who is an
officer or director of the depository bank (43).
V.—DISCOUNT AND LOAN RESTRICTIONS.

No bank may loan on real estate unless its security is a
first lien; second liens may be taken, however, to secure
the payment of previous debts (47).
No bank may loan on the security of the stock of
another bank if by making the loan the total stock of the
other bank held by the loaning bank as collateral exceeds
10 per cent of the other bank's stock, and no loan may be
made upon the capital stock of any bank which has not
been in existence for two years and paid a dividend (44).
No bank may loan its capital or the money of its depositors on shares of its own stock unless accepting this security is necessary to prevent loss on a previous debt, in
which case the stock must be disposed of within six
months ''from the time of its purchase" (34). No bank
may loan more than 5 per cent of its assets upon bonds of
any one issue except bonds of the United States, California, or California municipalities (46).
No officer or employee may directly or indirectly borrow the funds of the bank, nor may any officer, employee,
or director be an indorser or surety for loans to others or
in any manner be obligor for moneys borrowed or loaned
by the bank (33). Officials of the banking department
-may not borrow from banks subject to their supervision
(121). No director, officer, employee, or controlling
stockholder may directly or indirectly sell to his bank,
without the consent of the superintendent of banks, any
mortgage on real estate or contract resulting from the




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Monetary

Commission

sale of real estate made by a corporation or syndicate in
which the director, officer, employee, or controlling stockholder is interested (35).
No commercial bank may loan to any person, firm, or
corporation an a m o u n t exceeding one-tenth of its capital
paid in and surplus, except t h a t " a b a n k " m a y loan t o a
person, firm, or corporation, a sum not exceeding 25 per
cent of its capital paid in and surplus, on security worth
a t least 15 per cent more t h a n t h e loans, or it m a y loan
10 per cent of capital paid in and surplus, as stated at t h e
beginning of this paragraph, and a further sum not exceeding 15 per cent of capital paid in and surplus on security worth a t least 15 per cent more t h a n t h e a m o u n t of
t h e loan; b u t a commercial bank m a y buy, or discount
or loan upon, bills of lading, warehouse receipts, and bills
of exchange drawn in good faith against existing values,
or commercial paper owned b y the person negotiating
it (80).
No loan m a y be made by a commercial b a n k on t h e
securities of one or more corporations, t h e p a y m e n t of
which is undertaken, in whole or in part, severally b u t not
jointly, b y two or more individuals, "firms, or corporations: (a) if t h e borrowers or underwriters are obligated
absolutely or contingently to purchase the collateral securities, unless the borrowers or underwriters have paid
in cash an amount equal to at least 25 per cent of t h e
a m o u n t for which they are still obligated to complete t h e
purchase; (6) if t h e commercial bank making t h e loan is
liable, directly or indirectly, or contingently, for t h e rep a y m e n t of t h e loan; (c) if the term of t h e loan exceeds a
year, including any agreed renewal of it; or (d) t o an
amount, under any circumstances, in excess of 25 per
cent of the capital and surplus of the commercial b a n k
making t h e loan (81).




7®

California

— S t a t e

Banks

No commercial bank m a y loan any of its funds t o any
of its directors unless t h e loan has been first approved by a
two-thirds vote of t h e directors, t h e borrower not voting;
the loan, name of director, time when the loan is due, rate
of interest, and security pledged, if any, are submitted t o
the superintendent of banks, who, if he disapproves, notifies the bank to collect t h e loan. The total loans to all
directors of a bank must never exceed 30 per cent of capital and surplus (83).
VI.—INVESTMENTS .

No bank m a y invest in shares of corporations unless
the purchase is necessary to prevent loss on a previous
debt, in which case the stock must be disposed of within
six months from the purchase, unless t h e superintendent
grants permission to hold it longer (37). No b a n k may
invest more t h a n 5 per cent of its assets in any one bond
issue except bonds of the United States, California, or
California municipalities (46). No bank m a y purchase
or guarantee any bond issue in excess of 5 per cent of its
assets, except bonds of t h e United States, California, or
California municipalities (36). No bank m a y purchase
or invest capital or deposits in shares of its own stock
unless t h e purchase is necessary to prevent loss on a
previous debt, in which case the stock must be sold within
six months (34). See V, above, for other investment
restrictions, and see IV, above, for provisions respecting
t h e designation of depositories.
Investments, like all other transactions, must, in t h e
case of a b a n k having different departments, be made
separately and accounted separately for each department.
The cash, securities, and property of one department must
not be mingled with those of another (26). The money
belonging to each department and t h e investments are




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Monetary

Commission

held solely for t h e repayment of depositors in t h a t departm e n t ; if after paying t h e depositors in t h a t d e p a r t m e n t
an overplus remains, it is applied t o t h e other liabilities of
t h e b a n k (27).
VII.—OVERDRAFTS.

The report m a d e b y t h e directors a t least annually after
an examination of t h e affairs of their bank must include
" a s t a t e m e n t of overdrafts" (139); and t h e summary of
each b a n k ' s condition published at t h e time it reports
t o t h e superintendent must show " t h e total a m o u n t of
o v e r d r a f t s " (132). See also t h e section which makes it a
felony for any officer, employee, director, etc., to overdraw his account or t o accept a bribe for permitting an
overdraft b y another (39).
VIII.—BRANCHES.

No b a n k m a y open an office other t h a n its principal
place of business without t h e approval of t h e superint e n d e n t of banks, which is only given if t h e superintendent
has ascertained t h a t public convenience will b e promoted
by opening t h e office; in any case t h e paid-in capital m u s t
exceed t h e ordinary requirement by $25,000 for each
branch opened (9).
X.—UNAUTHORIZED BANKING.

No person, firm, or corporation not subject to t h e supervision of t h e superintendent and n o t reporting to him
m a y use an office sign having a n a m e or other words on it
indicating t h a t the place is a b a n k or t h a t banking business is done there; no person, firm, or corporation m a y
use letter heads or other papers showing a corporate n a m e
or other words indicating t h a t t h e business is t h a t of a
bank, savings bank, or trust company. Violation of this




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— State

Banks

section is a misdemeanor (12). I t is a misdemeanor also
t o transact banking business in t h e S t a t e without the
certificate of t h e superintendent (127). For restrictions
on banking b y foreign corporations, see 7.
Every individual, firm, or corporation doing a banking,
business m u s t on its signs, stationery, advertising, etc.,
use t h e word " c o m m e r c i a l " if it conducts a commercial
business, " s a v i n g s " if it conducts a savings business, and
" t r u s t " if it conducts a trust company business (28).
XI.—PENAl/flES.
The following are misdemeanors: The purchase by a
director, officer, agent, or servant of a bank, directly or
indirectly, of the assets of a bank for a sum less t h a n their
market value (42); direct or indirect borrowing of t h e funds
of a bank b y an officer or employee, or an officer,
employee, or director becoming in any manner an
obligor for money borrowed or loaned b y the b a n k (33);
failure by a state bank to withdraw its deposits on order
of t h e superintendent from a national b a n k which refuses
to be examined (48); advertising by a bank or one of its
officers the authorized or subscribed capital without also
stating how much has been actually paid u p (14); unauthorized maintenance by a bank or an officer or director
of a b a n k of a branch office (9); failure b y president or
managing officer of a b a n k to report deposits not dealt with
for ten years (15); failure on the part of a b a n k t o post
conspicuously its last certificate from t h e superintendent
(50); and failure by the directors of a b a n k to make an
annual examination and file at the bank a report based on
it (139). There seems no reason to suppose t h a t t h e 1909
statute repeals a section of the Penal Code, formerly in
force, which makes it a misdemeanor for an officer or
employee of a bank to receive deposits knowing the bank
is insolvent (Penal Code, sec. 562).




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T h e following are felonies: Violation by the officers of a
b a n k of the section which forbids purchases of and loans
upon shares of a bank's own capital except when necessary
to prevent loss on a previous debt and requires t h e stock
t h u s held to be disposed of within six months (34); violation by a director, officer, employee, or controlling stockholder of a bank of t h e section forbidding transfers to
the bank of mortgages arising from the sale of real estate
made by a corporation or syndicate in which t h e offender
is interested (35); violation b y the officers of a bank of the
section forbidding investments in shares of corporations
except when necessary to prevent loss on previous debts
and requiring t h e sale of such stock within six months (37);
neglect by the deputy of the superintendent or any
examiner, with knowledge of the insolvency or unsafe
condition of a bank, to report the fact to the superintendent (126); neglect on the part of the superintendent himself, if he has knowledge of the insolvency or unsafe condition of a bank, to take action against it as provided in
t h e statute (143); and violation by an officer or director
of a commercial b a n k of the section restricting loans to
directors and requiring them to be approved b y the
superintendent and to be monthly reported to him (83).
Any director, officer, agent, or employee of a bank who
takes its property except in p a y m e n t of a just demand
and, with intent to defraud, omits to make true entry of
t h e transaction on its books, or concurs in omitting to make
true entry, or concurs in publishing false statements of its
affairs, or fails to make proper entry in the corporation's
books or to allow t h e m to be inspected by t h e banking
department, is guilty of a felony (38). Any director,
officer, employee, etc., of a bank who knowingly overdraws
his account and obtains the funds of his bank and asks or
receives a consideration for procuring a loan from or dis-




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— Savings

Banks

count by his bank, or for permitting an overdraft of an
account with the bank, is guilty of a felony (39).
No director, officer, or agent of a b a n k m a y be interested
in the purchase of any of its obligations for a less sum t h a n
appears upon their face (41).
Any bank which fails to make its report within ten days
from the day designated for making it or to include in the
report any m a t t e r required b y law or b y the superintendent forfeits $100 for each day's offense (138).
Banks which fail to contribute their share to t h e fund
out of which the expenses of the banking department are
paid forfeit their certificates to transact business (123).

SAVINGS BANKS.
I.—TERMS OF INCORPORATION.

As noted in Banks, I, savings banking m a y be combined
with the other sorts of business (3 and 22). The s t a t u t e ,
as was noted in the introductory paragraph, contains certain provisions applicable to banks organized without
capital stock; it is to be inferred from this t h a t some
savings banks are m u t u a l organizations. "Savings " must
appear on all advertising, etc., of a bank conducting a
savings business (28).
See Banks, I, for the requirements for the capital stock
of a b a n k doing a departmental business. The savings
bank provision is t h a t every savings bank must have,
actually paid in, a capital stock of not less t h a n $25,000;
or, if organized without capital stock, a reserve fund of
at least $1,000,000 (60). I n the section requiring paid-up
capital and surplus of every bank to equal 10 per cent of
its deposit liabilities it is provided t h a t no savings b a n k
m a y be required t o have a paid-up capital and surplus of
more t h a n $1,000,000; or, if organized without capital
stock, a reserve fund of more t h a n $1,000,000 (19).




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Commission

The directors of a savings bank which has no capital
stock must retain on each dividend day at least 10 per
cent of the net profits of the bank to constitute a reserve
fund, which must be invested in the same manner as the
other funds of the bank and applied to payment of any
losses (64).
Restrictions on borrowing by savings banks and on
deposits in savings banks are grouped with loans under
V, infra.
II.—LIABILITIES

AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

The only particular provision to be here recorded with
respect to savings banks is that to be a director in a bank
organized without capital stock one must be both a member and a depositor of the bank (10).
III.—SUPERVISION.

The superintendent of banks has, besides his regular
duties given under Banks, authority with respect to savings banks to fix the amount which savings banks shall
be allowed to borrow to meet demands of depositors, and
the time and rate of interest on these loans (62).
EXAMINATIONS.

The superintendent must examine banks other than
savings banks at least twice a year, and must examine
savings banks at least annually. He has, of course, the
power stated under Banks, of examining any bank whenever, in his judgment, such an examination is necessary
(124).
IV.—RESERVE REQUIREMENTS.

Each savings bank must carry in cash or its equivalent
an amount equal to 4 per cent of its deposit liabilities, of
which 2 per cent of deposit liabilities must be in coin or




76

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— Savings

Banks

currency of standard value, in the bank's own keeping.
No new loan may be made during any deficiency in this
reserve (68). The provisions for the "reserve fund"
required of savings banks without capital stock (see I,
above) have no reference to money reserve, but to an
invested fund to take the place of capital stock.
V.—DISCOUNT, LOAN, DEPOSIT RESTRICTIONS, ETC.

No director or officer of a savings bank may directly
or indirectly borrow its funds nor become in any manner
obligor for moneys borrowed of or loaned by the savings
bank (65). No savings bank may loan money except on
adequate security of real or personal property and never
for a longer period than ten years. No loans may be made
on unsecured notes. No savings bank may loan more
than 5 per cent of its assets on bonds of any one issue,
except bonds of the United States, California, or California
municipalities. No savings bank may loan to exceed 90
per cent of the market value of bonds specified in (a), (b),
(c), and (d) of the second paragraph of Investments, below,
nor more than 85 per cent of the market value of bonds
specified in (e), nor more than 75 per cent of the market
value of bonds specified in (/) and (g), nor more than 65
per cent of the market value of personal property and
stock of corporations or banks; no loan may be made on
the capital stock of a corporation or bank that has not
been in existence for two years and has paid a dividend.
No savings bank may loan on any real-estate security
unless the security is a first lien, and in no event to exceed
60 per cent of the market value of the real estate except
to facilitate the sale of property owned by the savings
bank; a second lien may, however, be accepted to secure
the payment of a previous debt. No savings bank may
loan on shares of mining stock. No savings bank may




77

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Mon

etary

Commission

loan on the security of shares of stock in another bank, if
by making the loan the total stock of t h e other bank
held as collateral b y the loaning bank exceeds 10 per cent
of t h e other bank's stock (67). No savings b a n k m a y
loan on the bonds of any corporation if t h e franchise of
t h a t corporation expires prior to the m a t u r i t y of t h e
bonds or if its special franchise granted by some municipality so expires (61).
No savings b a n k may contract any debt or liability
for any other purpose t h a n deposits, except t h e following:
I t m a y pay regular depositors by draft on deposits to its
credit with other banks. No savings bank m a y borrow, or pledge its securities, except to meet t h e immediate demands of its own depositors, and then only b y
resolution of t h e directors and with the approval of
the superintendent of banks, who has authority t o fix
the amount, term, and rate of interest of the loan. Savings banks may, however, without t h e approval of t h e
superintendent, borrow the public moneys of t h e State
and of municipalities, and m a y receive such public
moneys on deposit (62).
Savings banks may issue transferable certificates of
deposit and, when requested, special nontransferable
certificates (63).
Deposits may be made with commercial banks and
t r u s t companies to facilitate business transactions, and
these are not to be construed as loans. Not more t h a n
5 per cent of t h e deposits of any savings bank, however,
may be deposited with any one b a n k (68).
Whenever there is a call by depositors for t h e payment of a greater amount t h a n t h e savings bank has
disposable, t h e directors m u s t not make new loans or
investments until the excess of call has ceased (64).




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— Savings

Banks

VI.—INVESTMENTS.

Saving banks may hold real estate only as follows:
(i) The lot and building in which the business is carried
on, their cost not to exceed the amount of capital and
surplus; (2) such realty as has been mortgaged to the
savings b a n k ; (3) such as it has purchased a t sales
under mortgages made for its benefit and such as is
conveyed to it in satisfaction of loans. Real estate
acquired under (3) m u s t be sold within ten years unless
permission for longer holding is given b y t h e superintendent.
No savings bank m a y hold personalty except such as
is required for its accommodation in business, and mortgages on real estate, bonds, securities, etc., bullion,
mint certificates, and evidences of debt issued b y t h e
United States. Bonds and securities may be held only
as follows: (a) United States securities; (b) bonds of
California; (c) bonds of any S t a t e which has not defaulted in principal or interest in five years; (d) bonds
of California municipalities; (e) bonds of any city, town,
or county of 20,000 inhabitants in any other State, provided the entire bonded indebtedness of t h e municipality
does not exceed 5 per cent of its taxable property, including t h e issue of bonds under which the investment
is made, and provided t h a t the municipality or the State
in which it is situated has not defaulted on principal or
interest for five years; (/) first mortgage or underlying
bonds of a steam railway in t h e United States, t h e income of which pays operating expenses and fixed charges;
(g) bonds of street railroads, water, light, light and
power, gas, and other public utility and industrial corporations. These bonds must be secured by a first or
underlying mortgage of the corporation issuing the
bonds, or b y a refunding mortgage to retire all prior




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Commission

debts of the corporation, and the income of the corporation must have been sufficient to pay operating expenses and fixed charges for three years prior to the
issue of the bonds or else the payment of the bonds must
have been guaranteed by a corporation which has paid
operating expenses and fixed charges for three years
prior to making the guaranty; (h) first mortgage bonds
of real-estate corporations, provided the bond issue does
not exceed 60 per cent of the market value of the real
estate taken as security. No savings bank may purchase bonds of a corporation if the franchise of the corporation expires prior to the maturity of the bonds,
or if the special franchise granted to this corporation
by a municipality so expires (61). No savings bank
may deal or trade in realty or personalty except as provided in the statute (62). No savings bank may invest
more than 5 per cent of its assets in bonds of any one
issue, except bonds of the United States, California, or
California municipalities. No savings bank may purchase
mining stock (67).
X.—UNAUTHORIZED BANKING.

No commercial bank, individual banker, trust company,
firm, or corporation may advertise as a savings bank or
in any way solicit or receive deposits as a savings bank,
except savings banks or other banks having savings departments subject to the provisions of the statute (49).
Every individual, firm, or corporation doing a savings
banking business in the State must use the word " savings "
on its signs, advertising, stationery, etc. (28).
XI.—PENALTIES.

Particular provisions with respect to savings banks
make it a misdemeanor for a director or officer to borrow,




80

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— Trust

Companies

directly or indirectly, the funds of his bank, or be in any
way an obligor for moneys borrowed of or loaned by the
bank; it is similarly a misdemeanor to authorize or consent
to such a loan or to receive it. The officer or director violating these provisions immediately loses his office (65).
The president or managing officer consenting to a violation
of the section containing most of the restrictions on savings bank loans (see V, supra) is guilty of a felony (67).
TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

Trust-company business may be combined with either
or both of the other two sorts (3 and 22). Trust funds
must of course be kept separate from other assets (32).
" Trust" must appear in all advertisements, etc., of a bank
doing a trust business (28).
Before the superintendent issues a certificate of authority to transact business, a majority of the board of directors of the proposed trust company must make affidavit
that at least $200,000 of capital stock has been paid in
(100). See Banks, I, for capital required for departmental
business.
III.—SUPERVISION.

Before doing a trust business, a company must deposit
with the treasurer of the State $100,000 in certain securities (96, et seq.). The superintendent supervises the retirement from business of any trust company (102).
REPORTS.
In addition to the items required in the reports of every
bank, a trust company must furnish a list and brief description of the trusts it holds, etc. (101).
S. Doc. 353, 61-2




6

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Commission

VI.—INVESTMENTS.

Trust companies invest their capital and trust funds in
accordance with the laws relative to the investment of
funds deposited with savings banks, unless a specific
agreement to the contrary is made between the trust company and the person creating the trust (105).
X.—UNAUTHORIZED TRUST COMPANY BUSINESS.

The use of the word " t r u s t " in connection with the
words "company," "association," etc., is prohibited to
everyone except corporations provided for in the statutes.
The use of the word without authority is a misdemeanor.
No corporation may use the word " trust" or " trustee " as
part of its name unless it is authorized by its articles of
incorporation to act in fiduciary capacities, nor may it
act in such capacities unless it has complied with the
provisions of the statute (104). Every bank conducting
a trust department must use the word " t r u s t " on its
signs, advertising, and stationery (28).
XI.—PENALTIES.

The officers of any bank receiving trust funds who mingle these funds with other assets of the bank or count them
as part of the reserve are guilty of a felony (32).




82

COLORADO.
Mills' Annotated Statutes of Colorado, volumes I and
II, include all statutes in force January i, 1891. Volume
III carries the statutes to January 1, 1905. Subsequent
statutes are in the session laws of Colorado for 1905,
1907, and 1909. In volumes I and II, banks are treated
in a short chapter (12); and in chapter 30 (corporations),
there are provisions, in division 2 (particular corporations), on first, banks (sees. 510-519), second, savings
banks (sees. 520-530), and third, trust, deposit, and
security associations (sees. 535-544). Volume III, though
it does not alter the law on banks and savings banks,
adds a later act for the regulation of trust companies,
embodied in sections 544a to 544/. In the session laws
of 1907 there is an important act at page 222, providing
for supervision and other regulation, extending, under
section 36 of the act, to all individuals, firms, savings
banks, trust companies, or other corporations engaging
in banking business in Colorado. Since this act applies,
therefore, to all banking institutions, its provisions,
together with those of the former statutes which apply
generally, are grouped in the digest under the title "General provisions." Those provisions which apply only to
one of the three classes are later grouped under the respective titles: " Banks," "Savingsbanks," and "Trust companies." Where citations are simply numbers in parenthesis they are to sections in Mills' statutes. The act of




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1907 is cited by its number in t h e session laws for t h a t
year (111) and by sections in the act. There is late
legislation dealing with building and loan associations.
GENERAL PROVISIONS.
I . — T E R M S OF INCORPORATION.

The liability of any bank for borrowed money or rediscounted paper m u s t never exceed the a m o u n t of t h e
actual capital stock paid in ( i n , 27). Dividends m u s t
be declared only from net earnings (531).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

Shareholders in banks, savings banks, trust, deposit,
and security associations are individually responsible for
t h e debts of the corporations in an amount double t h e par
value of their stock (533).
If any director or officer receives deposits or creates
debts with knowledge of t h e corporation's insolvency, he
is guilty of larceny; he is also individually responsible for
t h e deposits received or indebtedness contracted (222,
224, and i n , 31). The executive officers of all corporations give bonds for the faithful performance of their
duties; breach of these bonds gives a right of action t o
whatever persons are damaged ( i n , 39). No officer of
any banking institution m a y take compensation as an
inducement to make a loan out of the funds of the bank
(in,

3 2 )III.—SUPERVISION.

The official in charge of banking is the state bank commissioner, a qualified person who has been for three years
a citizen of Colorado, who has had at least five years'




84

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— General

Provisions

experience in practical banking, and who is not interested
in any banking institution except as a depositor. His
term of office is four years ( i n , i). The commissioner's
salary is $3,600 a year ( i n , 2). He and his deputies
must keep secret whatever information they obtain in the
course of their duties ( i n , 3 and 4).
If a bank refuses to submit its books for the inspection
of the commissioner, or refuses to furnish information,
he institutes proceedings for the appointment of a receiver
( i n , 7). If he has reason to believe that the capital of
any banking institution is impaired he must examine the
bank to ascertain its true condition; and if he finds the
capital really impaired, he requires the bank to make
good the deficiency. If for sixty days the deficiency is
not made good to his satisfaction, he takes control of the
bank and institutes proceedings for a receivership ( i n , 8).
When he learns that a banking institution has refused to
pay its depositors, or that it is insolvent, or that it has
returned a false report, he takes charge of the affairs of
the institution until a receiver is appointed ( i n , 10). A
banking institution may voluntarily put its affairs and
assets under the control of the commissioner. He has
complete control until a receiver is appointed ( i n , 13).
When the commissioner has taken charge of the affairs
of a banking institution, under any circumstances, he
must apply to the proper court for the appointment of a
receiver as soon as possible ( i n , 14). If the commissioner finds, after taking control, that the institution is
only temporarily embarrassed, or that whatever impairment there has been will be made good, etc., he may
refrain from applying to the court for a receiver and allow
the bank, upon arranging its affairs with its creditors, to
resume business within sixty days ( i n , 15). If a bank
exceeds the prescribed loan limit, the commissioner may
order the excess reduced within sixty days ( i n , 30).




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REPORTS.

E v e r y banking institution makes to the commissioner
not less t h a n three reports a year in t h e form he prescribes,
exhibiting in detail the resources and liabilities of t h e
b a n k a t t h e close of business on a past day specified b y
t h e commissioner. The day m u s t be t h e same as t h a t
upon which national banks m a k e their reports. Within
ten days after the request of t h e commissioner, t h e reports
m u s t be transmitted to him; and they must be published
in a local newspaper. Special reports m a y be called for
by t h e commissioner when necessary, b u t need not be
published ( i n , 17). Receivers of insolvent banks report
as t h e institutions themselves would ( i n , 11).
The commissioner makes a report to t h e governor every
other year, giving details of each institution reporting t o
him, general statistics, and such other information concerning t h e banking situation in t h e state as he thinks
necessary ( i n , 23).
Banking associations and t r u s t companies m a k e certain
reports t o the assessor for purposes of taxation (3927m).
EXAMINATIONS.

A t least twice a year, and oftener if t h e commissioner
deems it advisable, he or his deputy examines t h e cash,
bills, collaterals, books, documents, assets, liabilities, and
other affairs of each banking institution and t h e methods
it employs ( i n , 6). Whenever the commissioner has
reason t o believe t h a t t h e capital of a banking institution
is impaired, he must make an examination of t h e affairs
of t h e institution ( i n , 8). The commissioner examines
corporations in t h e hands of a receiver once every six
months ( i n , n ) .
Before beginning business, banking institutions are
examined b y t h e commissioner to determine if t h e y are
solvent and if they have the required capital ( i n , 20).




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— General

Provisions

V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

The total liability to any banking institution of one
person, firm, or corporation for money borrowed, including in company or firm liabilities those of t h e members,
must not exceed 20 per cent of the capital and surplus
of t h e b a n k ; b u t t h e discount of bills of exchange, loans
on produce in transit or on warehouse receipts, etc., or
on collateral having a market value in excess of t h e loan
(this last exception renders t h e restriction on individual
liability easily avoided), and t h e discount of commercial
paper generally, are not considered as money borrowed
( i n , 30). No director or officer m a y borrow over 10
per cent of t h e capital and surplus of the lending bank
without t h e consent of a majority of the directors exclusive of t h e borrower; and all loans to officers must
have t h e consent of t h e directors ( H I , 29). I t was law
before t h e act of 1907, t h a t no corporation could loan to
an officer or director an amount greater t h a n 90 per cent
of t h e stock in t h e corporation actually owned b y the
borrower, unless he gave security worth 10 per cent more
t h a n t h e loan (223); b u t the state b a n k commissioner
considers this provision repealed b y t h e s t a t u t e of 1907.
No banking institution may loan upon its own stock
as security unless it is received as collateral or in t h e
collection of previous debts, in which case it must be
disposed of as soon as conveniently can be done (111, 28).
Limitations on borrowing power are given under I,
supra.
VI.—INVESTMENTS.

Banking institutions must not employ their assets in
trade or commerce nor hold real estate except such as
they occupy in connection with their banking business,
nor m a y they engage in mining or speculate in unstable




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Mon

etary

Commission

property. They may hold all kinds of property, including their own stock, which come into their possession
as collateral or in the collection of debts, but property
so acquired must be disposed of as soon as can conveniently be done ( i n , 28).
VII.—OVERDRAFTS.

Overdrafts are apparently allowed, for it is provided
that in declaring dividends, all "losses, overdrafts, and
surplus" must be first deducted from earnings (531).
VIII.—BRANCHES.

No banking association or corporation may establish
any branch office or agency, or employ an agent to make
loans or discounts at any place other than the banking
house of the association (531).
X.—UNAUTHORIZED BANKING.

It is unlawful for any individual, firm, or corporation
except national banks to do a banking business, or advertise as though they did a banking business, or use
such words as "bank," "banking," or "trust company"
without complying with the provisions of the statute.
Violation of this provision is a misdemeanor entailing
imprisonment for not over one year, or a fine of not over
$1,000 or both ( i n , 34). Individuals and firms doing
banking business under the statute are not allowed to
use the word " S t a t e " as part of the bank or firm name
(HI,

21).
XI.—PENALTIES.

The director or officer of any banking institution who
receives deposits, knowing the institution is insolvent,
is guilty of larceny, for which the punishment is fine not




88

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— General

Provisions

exceeding $5,000, imprisonment not exceeding five years,
or both (222 and m , 31). If any officer of a bank takes
compensation for inducing the bank to make a loan he
is guilty of a misdemeanor, punishable by a fine of not
over $1,000, imprisonment for not more than twelve
months, or both (111, 32).
If the commissioner or one of his employees discloses
information which he should keep secret he forfeits his
office and is fined from $500 to $1,000, or imprisoned
from six months to two years, or suffers both penalties
(111,4). Any official making an examination who reports
fraudulently in order to aid an insolvent institution or
to injure an institution, or any official making examination
who takes a bribe for any purpose or neglects to examine
an institution by reason of having taken a bribe is guilty
of a felony, punishable by imprisonment for from two to
ten years (111, 6).
Institutions which fail to report are subject to a penalty
of $25 a day during the delay ( i n , 18). Receivers who
fail to report or submit to examination suffer the same
penalties (111, 11). The executive officers of banking
institutions who fail to file bonds are subject to the penalties provided for failure to make reports ( i n , 39).
For penalties upon bank officials who fraudulently
issue or transfer stock see 1389 and 1390. Any person
who, with intent to defraud, gives a check on a bank
in which he has not sufficient funds is guilty of a misdemeanor, punishable by a fine of not less than $200 nor
more than $1,000, or imprisonment for not less than
three months nor more than one year, or both (1397).




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BANKS.
I . — T E R M S OF INCORPORATION.

The required capital for banks of discount and deposit
is as follows: In cities and towns having a population of
2,000 or less, at least $10,000; in those of from 2,000 to
5,000, at least $15,000; in those of from 5,000 to 10,000,
at least $25,000; in those of over 10,000, at least $30,000.
At least 50 per cent of the capital must be paid in in cash
before business is begun, and the whole capital must be
paid in in cash within a year (1907, chap. 140). Unincorporated banking businesses must have a capital of
at least $10,000 ( i n , 20).
The directors of every bank declare semiannually
dividends of so much of the net profits as they deem
expedient (516).
Possibly banks may have a savings department,
for it is provided that "any savings bank or banking
association formed under the provisions of this act" must
hold a certain per cent of its savings deposits by way of
reserve (526).
II.—LIABILITIES AND DUTIES OF DIRECTORS.

There must be not more than nine directors (512). If
they willfully violate any of the provisions of the banking
act in the general statutes they become personally liable
for all the debts of the bank contracted previous to and
during the period of their neglect (517).
III.—SUPERVISION.

The provision of section 516, that a report be submitted
to the state treasurer immediately after the declaration
of a dividend and that it be published seems repealed by
in,

17.




90

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—

State

Banks

IV.—RESERVE REQUIREMENTS.

If a bank has a savings department it must keep at its
own bank or on deposit subject to call at least 20 per cent
of the savings deposits (526).
V.—DISCOUNT AND LOAN RESTRICTIONS.

I t is provided in chapter 140 of 1907, possibly in conflict with i n , 28, which applies to all banking institutions
and is given above under General Provisions, V, t h a t
no b a n k shall t a k e as security for a n y loan or discount a
lien on any p a r t of its capital stock. The same security
is required from shareholders as from persons not shareholders (1907, chap. 140).
The stockholders collectively of a n y b a n k must never
be liable to the b a n k to an a m o u n t greater t h a n two-fifths
of t h e capital (519).
VI.—INVESTMENTS.

A b a n k m a y hold real estate only when necessary for its
accommodation in t h e transaction of its business; when
mortgaged to it in good faith for previously made loans;
when conveyed to satisfy previous d e b t s ; and when purchased under judgments or mortgages held by the bank,
b u t in this last situation t h e bank must not bid a larger
a m o u n t t h a n is necessary t o satisfy t h e debt and cost
(514);
I t is provided in chapter 140 of 1907, possibly in conflict with t h e provision applicable to all banking institutions in section 28 of chapter i n , t h a t no b a n k shall
hold a n y portion of its own stock or of the stock of any
other incorporated company unless t h e purchase is necessary to prevent loss on a debt previously contracted
on security which a t the time t h e loan was made was




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Monetary

Commission

thought adequate. Stock so purchased must in no case
be held by the bank longer than six months, if it can be
sold at par or for what it cost (1907, chap. 140).
SAVINGS BANKS.
I.—TERMS OF INCORPORATION.

The capital of a savings bank must be not less than
$25,000, paid in in cash (520).
Dividends may be declared out of net profits (534).
II.—LIABILITIES AND DUTIES OF DIRECTORS.

There must be at least three directors, who must be
stockholders (521).
IV.—RESERVE REQUIREMENTS.

Every savings bank must keep at its bank or on
deposit, subject to call, with some other bank, at least
20 per cent of its savings deposits (526). See, however,
the provision of 523, given below under V, which seems to
look toward the retention of 50 per cent of deposits in the
savings bank itself or on deposit.
V.—DISCOUNT AND LOAN RESTRICTIONS.

Savings banks may invest one-half of their deposits on
personal security, in securities of Colorado or of the
United States, or in bonds of Colorado municipalities, or
they may loan these funds on bonds secured by mortgage
of unincumbered real estate worth double the loan. The
other half of the deposits they may deposit temporarily
in other banks, though they must never deposit more than
$25,000 in any one bank; or they may keep the whole of
this other half to meet current payments, depositing it,
or handling it otherwise, as seems convenient (523). No




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—

Trust

Companies

savings bank may take as collateral its own stock (526).
No officer of a savings bank may borrow from the bank,
or be surety for a borrower; nor may a savings bank discount paper of a cashier or clerk in the bank (530).
VI.—INVESTMENTS.

As stated above, under Loans, savings banks may
invest one-half their deposits on personal security, in
Colorado or United States securities, or in securities issued
by municipalities of Colorado (523).
X.—UNAUTHORIZED BANKING.

Savings bank business may be carried on only by
persons organized under Colorado law (528).
TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

Under the provisions of the old statute dealing with
trust, deposit, and security corporations, a corporation
for this purpose had to have a capital of not less than
$50,000; $30,000 had to be paid in before business could
be done (536). Under the later act providing for "the
incorporation and regulation of trust companies," found
in Volume III, trust companies are required to have a
capital stock of at least $100,000 in cities of the first class
and $50,000 in cities of the second class, paid in in cash
(544;, amd. by 1909, chap. 215). (For classification of
cities, see 4482 et seq.)
The enumeration of trust company powers does not include except by rather free inference that to do a banking
business, and it is provided that trust companies may not
do a banking business except in so far as the statutes expressly authorize it (544c).




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II.—LIABILITIES

AND

DUTIES

Commission
OF

STOCKHOLDERS

AND

DIRECTORS.

Section 533, stated under I I in General provisions,
makes shareholders in trust, deposit, and security associations liable for double the par value of the stock they own.
The more recent t r u s t company law makes t h e stockholders
of t r u s t companies individually responsible for debts of
their corporation during the time of their being stockholders, "equally and ratably to the extent of their respective shares of stock in such association and in addition
t h e r e t o " (5449).
There must be n o t less t h a n three directors of a trust,
deposit, and security association (540).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

Trust companies m a y not loan to their directors or
officers nor loan upon the stock of the company (544/).
VI.—INVESTMENTS.

The trust, deposit, and security association law provides t h a t such an association m a y hold whatever real or
personal estate is necessary t o carry on its business, as well
as t h e real or personal estate it m a y think it necessary to
acquire in enforcement or settlement of demands arising
out of its business transactions (542). T h a t law authorized investment of the capital of such a corporation in
good securities; in bonds and mortgages on unincumbered real estate in Colorado; in securities of the States
of t h e United States or of Colorado municipalities (543).
The later trust company law requires t h a t t r u s t funds
and investments be separated from assets of t h e company
and investments of them (544^). I t gives trust companies wide latitude in the investment of trust funds, b u t




94

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—

Trust

Companies

forbids them to be invested in the stock or bonds of any
private incorporated company (544^).
X.—UNAUTHORIZED TRUST COMPANY BUSINESS.

The word " t r u s t " must not be used as part of the
name of any institution unless it has organized under the
trust company laws. The penalty for breach of this rule
is found under General provisions ( i n , 34).




95

CONNECTICUT.
Title 24 of the revision of 1902 of the general statutes of
Connecticut deals with ''Banking institutions." It contains five chapters: No. 199, "State banks and trust companies;" No. 200, " State banks converted into national
banking associations;" No. 201, " Savings banks;" No. 202,
" Bank commissioners;" and No. 203, " Receivers of banks,
savings banks, and trust companies." Inasmuch as banks
and trust companies are, as appear from the heading of
chapter 199, legislated for together, the Connecticut laws
are digested under two heads instead of three. The provisions for supervision are, in so far as they are general and
applicable to all three classes of institutions (qualifications
of bank commissioners, salaries, etc.), inserted only once—
that is, under the first heading. The references, where
they are simply numbers in parenthesis, are to sections in
the revision of 1902. Where they are to later enactments,
they are cited by the year in which they were passed and
the chapter in that year's volume of laws. The statutes
have been examined through the session of 1907; and one
or two minor additions have been made which cover, according to the advice of Mr. Charles H. Noble, bank commissioner, all the legislation affecting the digest passed
at the session of 1909, the statutes of which are not, at
the time of making this compilation, yet published.




96

Connecticut

— State

Banks,

etc.

B A N K S AND T R U S T COMPANIES.
I . — T E R M S OF INCORPORATION.

Dividends may be declared only from net profits (3413).
Banks and trust companies m a y conduct savings departments, as appears from the provision requiring them to
report savings items and to separate the savings-deposit
investments, etc. (1907, 85).
I I . — L I A B I L I T I E S AND D U T I E S O F STOCKHOLDERS AND
DIRECTORS.

Although there is no provision for stockholders' liability
in the chapters applicable to banks, it is a provision of the
general corporation act t h a t no stockholder shall be liable
for any debt of the corporation after the par value of his
stock has been paid (3369).
Three-quarters of the directors of banks and t r u s t companies must be residents of Connecticut (3410). Not more
t h a n three officers of any one savings bank m a y be officers
of a bank or t r u s t company; and no cashier of a b a n k m a y
be treasurer of a savings b a n k t h a t has over $500,000 deposits (3443). Directors of banks and trust companies
must not receive any compensation for indorsing paper
discounted b y the corporation (3412).
III.—SUPERVISION.

The state officials in charge of banking are two b a n k
commissioners who hold office for four years (3455), and
receive a salary of $3,500 each; these and the other salaries of the commissioners' office, are apportioned among t h e
banking institutions of the S t a t e (3464; and a 1909 amendment). Officers of banks, savings banks, and t r u s t companies chartered by Connecticut are ineligible t o be b a n k
commissioners. If a commissioner becomes interested in
S. Doc. 353, 61-2




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Commission

t h e business of banking or negotiating loans he forfeits his
position. When a commissioner becomes indebted to a
b a n k t h a t b a n k m u s t notify t h e governor (3456). T h e
commissioners m u s t not disclose t h e information t h e y
acquire, except as their duties d e m a n d (3457). They approve reserve depositaries (3400).
The commissioners apply for t h e appointment of a receiver in case t h e reserve of a state b a n k or trust company
falls below 15 per cent and t h e b a n k fails for t h i r t y days
t o make the deficiency good-(3400). When t h e b a n k commissioners consider t h e charter of any bank, savings bank,
or t r u s t company forfeited, or the public in danger of being defrauded, they m a y institute proceedings in court for
a receivership (3461).
Upon application of the b a n k commissioners or of t h e
directors of any bank, savings bank, or trust company, a
court m a y m a k e an order restraining the bank from paying out its funds or declaring dividends (3460).
REPORTS.

All banking institutions, immediately after organizing,
report the fact of their organization to the b a n k commissioners (3463).
S t a t e banks and t r u s t companies report to the b a n k
commissioners at least five times annually, exhibiting in
each report in detail, in a form prescribed b y the commissioners, t h e resources and liabilities of the bank at t h e
close of business on a past day specified b y the commissioners; t h e report must be sent to t h e commissioners
within ten days after they request it and must be published
in such form as they prescribe in a local newspaper (3416;
and 1903, 167).
Banks and t r u s t companies t h a t conduct savings dep a r t m e n t s report to t h e b a n k commissioners a s t a t e m e n t




98

Connecticut

— State

Banks,

etc.

of the amount of the deposits and the securities in which
they are invested, together with the other information
required to be given in their annual statement (1907, 85).
Receivers of banks, savings banks, and trust companies
appointed under the provisions of chapter 203 report to
the commissioners annually, or oftener if the bank commissioners require, on the state of the bank's affairs
(3472).
The commissioners report annually to the governor the
condition of all institutions examined by them with such
recommendations as they deem proper. They report to
the local state's attorney any violation of law (3459).
Banks, national banks, and trust companies are required to file certain annual statements with the tax commissioner showing especially the place of residence of all
the stockholders (1905, 54). Section 2332 and following
in the Revised Taws cover taxation of banking corporations; incidental to the taxation are the returns to the
assessors of towns under section 2336.
EXAMINATIONS.

These are semiannual or more frequent, covering books
and papers (3457). Trust companies are specifically
made subject to examination by 1903, 167. Special
examinations of school fund depositaries are allowed,
and also special examinations by the treasurer of the
State in case stock in the examined bank or trust company is owned by the State (3405).
Stockholders in a bank or trust company are given authority to examine the books, accounts, securities, and
expenditures of their corporation at an annual meeting or
at a special meeting called for the purpose by five stockholders owning not less than 100 shares (3406).




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M on et ar y
IV.—RESERVE

Commission

REQUIREMENTS.

Banks and t r u s t companies m u s t maintain a reserve
equal to 15 per cent of their aggregate deposits. Not less
t h a n four-fifteenths of this reserve must consist of gold
and silver coin, t h e demand obligations of t h e United
States, or national-bank currency, held by the b a n k in its
office; the remainder m a y consist of balances with reserve
agents subject to demand, and of railroad bonds which
are legal investments for savings banks. The reserve
agents m u s t be members of clearing-house associations of
New York, Boston, Philadelphia, Chicago, or Albany, or
else be national banks, state banks, or trust companies in
New Haven, Bridgeport, or Hartford. Each reserve depositary m u s t be approved b y t h e b a n k commissioners.
The a m o u n t of reserve held in t h e form of railroad bonds
m u s t never exceed one-fifth of t h e whole reserve (3400,
amd. b y 1909, 40). This provision for reserve does not
apply to savings deposits in banks and trust companies
(1907, 85).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

The total liabilities to any b a n k or trust company of
any person, firm, or corporation, including in firm liabilities the liabilities of its members, m u s t not exceed 10 per
cent of the a m o u n t of the capital of the b a n k or t r u s t
company and its surplus and undivided profits. This
restriction, however, is subject t o t h e proviso t h a t t h e 10
per cent limit of individual loans m a y be exceeded t o a
point not over 20 per cent, provided the loans are secured
b y collateral whose market value exceeds by 20 per cent
t h e liabilities secured. Twenty per cent of capital, surplus, and profits is set as t h e highest point of a loan t o
any individual, firm, or company (3402).




100

Connecticut

— State

Banks,

etc.

Banks and trust companies m a y not loan to any director
an amount exceeding 5 per cent of capital, surplus, and
undivided profits, and t h e total of debts due from directors
must not exceed 20 per cent. I t is permitted, however, to
exceed the limits thus set if t h e loans are secured b y collateral of a certain market value, etc. (3411).
No bank or trust company m a y loan or discount on a
pledge of its own stock (3401). No b a n k or trust company m a y discount negotiable instruments made, accepted, or indorsed by an officer or clerk (3403). No b a n k
or trust company m a y loan to parties outside Connecticut
until the loans and discounts to parties within Connecticut
amount to one-half the capital of t h e corporation (3404).
The provision in the s t a t u t e prohibiting loans a t interest
greater t h a n 15 per cent excepts from t h a t prohibition
loans b y and to national banks, state banks, and trust
companies, and excepts also bona fide mortgages of real or
personal property (1907, 238).
VI.—INVESTMENTS.

A b a n k and trust company t o which its own stock has
been transferred m a y cast no vote on it, except t h a t a trust
company holding its own stock in trust may vote the stock
so held (3407). I n the general corporation law it is provided t h a t corporations m a y hold such stocks and bonds
issued b y other corporations " a s t h e purpose of t h e corporation shall r e q u i r e " (3355).
Banks and trust companies are allowed to maintain savings departments, the deposits in which, however, m u s t
be invested according to the statutes prescribing investments for deposits in savings b a n k s ; investments t h u s
made are for the protection solely of depositors in savings
department (1907, 85).




IOI

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Monetary

Commission

VIII.—BRANCHES .

Banks and t r u s t companies are prohibited from establishing branches or employing agents to do business in
other places t h a n at t h e home office (3401).
X.—UNAUTHORIZED BANKING.

Soliciting deposits as a savings b a n k or using on a sign
such words as " b a n k , " " t r u s t , " or " savings," or any n a m e
indicating t h a t t h e persons are a bank, savings bank, or
trust company is illegal if t h e users of t h e word are not
entitled to do so under the s t a t u t e . The penalty for such
use m u s t not be more t h a n $1,000. Firms or individuals
who deposit a $10,000 bond with t h e state treasurer or,
if they choose, acceptable securities to the same value, m a y
style themselves private bankers (1907, 86).
XI.—PENALTIES.

There is a general provision t h a t if no other penalty is
provided any violation of t h e law in relation to banks, savings banks, or t r u s t companies shall be a fine of from $100
to $500 (3454-)Banks and t r u s t companies which exceed t h e loan limit
set b y section 3402 forfeit $3,000 (3402). Those t h a t violate t h e provisions against loans to officers forfeit between
$500 and $1,000 for each offense (3411). Directors who
indorse for a compensation paper discounted by their
bank or t r u s t company forfeit between $500 and $1,000 for
each offense (3412). Directors voting for illegal dividends
forfeit $500 (3413). If a b a n k or t r u s t company fails t o
transmit its report t o the commissioners it forfeits $10 a
day (3416).




102

Connecticut

— Savings

Banks

SAVINGS B A N K S .
I . — T E R M S O F INCORPORATION.

Savings banks are institutions without capital stock.
The net income of any savings bank in excess of oneeighth per cent of its deposits, actually earned during the
preceding half year, and only such net income, may be
divided semiannually among the depositors. Dividends
ordinarily must not exced 4 per cent a year (3440). Savings banks are required to hold a surplus of at least 3 per
cent of their deposits as a contingent fund, which must
never exceed 10 per cent of the deposits; any surplus beyond that may be divided in sums not less than 1 per cent
of deposits (3441).
Directors of savings banks may discriminate in distributing dividends between deposits of $1,000 or less, and
those above. Discrimination must not exceed 1 per cent
a year, and if it is necessary it must be in favor of the
smaller deposits (3442).
II.—LIABILITIES AND DUTIES OF DIRECTORS.

Not more than three officers of any one savings bank
may be officers of a bank or trust company, and no cashier
of a bank may be treasurer of a savings bank that has
over $500,000 deposits (3443).
Directors of savings banks appoint annually at least two
auditors not interested in the bank, who examine its books,
accounts, and securities, and file in the bank office a statement, a copy of which is forwarded annually to the commissioners (3447).
III.—SUPERVISION.

The general provisions concerning the bank commissioners were given under Banks and trust companies.




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T h e authority of the bank commissioners to apply for
restraining orders or institute receivership proceedings is
t h e same as it was under Banks and trust companies
(3460 and 3461). They approve of a savings b a n k ' s expenditure for a building (3438).
REPORTS.

The treasurer of each savings bank, yearly, or if
required b y t h e b a n k commissioners, oftener, reports its
condition to them, giving t h e par value, cost, and m a r k e t
value of its assets, besides all information required in t h e
annual statements of banks and trust companies (3452).
Receivers of savings banks, like receivers of b a n k s and
t r u s t companies, report t o the b a n k commissioners (3472).
T h e commissioners receive annually a report of t h e examination b y t h e two auditors explained above (3447).
Savings banks are also required to report various
matters in connection with taxation (2336; 1903, 189;
a n d 1907, 2 0 4 ) .

The treasurer of each savings b a n k reports annually t o
t h e comptroller t h e n a m e of such depositors as have not
dealt with their deposits for twenty years. The statem e n t must include the amount credited to such persons.
No statement need be made, however, where the depositor
is known b y the bank to be living. The comptroller
communicates this statement to the general assembly
(3450.
EXAMINATIONS.

Savings banks are, like banks and trust companies,
examined semiannually or oftener by the b a n k commissioners (3457). There is also an annual examination
by two auditors, appointed b y the directors (3447).




104

Connecticut

— Savings

Banks

V . — D I S C O U N T , L O A N , AND D E P O S I T R E S T R I C T I O N S .

No savings bank, having more t h a n $25,000 of deposits,
m a y loan on personal security to any one person or company more t h a n 3 per cent of its deposits (3432), nor
m a y a savings b a n k b u y an obligation or loan upon it if
only one person or firm is obligated, unless t h e savings
bank takes additional security equivalent t o an indorsement (3433)No officer of a savings bank m a y borrow or be .surety
for a loan of any of its funds, nor m a y he take a fee for
procuring a loan from a savings b a n k or for selling securities to it (3446).
W i t h minor exceptions savings banks may not receive
interest at more t h a n 6 per cent (3439).
No individual m a y deposit more t h a n $1,000 annually
in one savings b a n k (3433).
VI.—INVESTMENTS .

No savings b a n k m a y expend in a building t o accommodate its business more t h a n can be taken from the
surplus, after allowing for depreciation of securities and
the 3 per cent contingent fund; this expenditure is in all
cases subject t o t h e approval of t h e bank commissioners
(3438).
The securities in which savings banks m a y invest
their deposits and surplus are, omitting minor distinctions, as follows: First, not exceeding 20 per cent of
t h e deposits and surplus in notes secured b y t h e
pledge of stocks or bonds which have paid dividends
or interest for two years at not less t h a n 3 per cent,
or by t h e pledge of securities which can be purchased b y
savings b a n k s ; second, not exceeding 20 per cent in notes
which are t h e joint and several obligations of two or more
residents of Connecticut; third, in United States bonds,




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Commission

the bonds of any New England State, and the bonds of
certain other enumerated States; fourth, in the bonds of
any New England city, or any city in New York, or certain enumerated cities; fifth, in the obligations of municipalities of Connecticut; sixth, in the stock of a bank or
trust company located in Connecticut, New York City, or
Boston; seventh, in the bonds of other cities in the States
enumerated before, if the city has not less than 20*000
inhabitants, if the amount of its bonds does not exceed
7 per cent of the taxable value of its property, and if the
city has not defaulted on its debt within fifteen years;
eighth, in the bonds of any railway company in the
enumerated States if the bonds are a first mortgage and if
they are the only mortgage on some portion of the road;
also in the consolidated refunding bonds of Connecticut
railways if in all these cases the railroad has paid for five
years interest and at least 4 per cent dividends on all its
stock and if the stock of the railroad equals at least onethird of the outstanding bond issue; ninth, in the bonds
of enumerated railroads if for five years the railroad has
paid interest and dividends and if the stock of the railroad
equals at least one-third its mortgage debt. All railroad
bonds cease to be legal investments for savings banks
when the railroad ceases to pay dividends on all its stock.
The securities of railroads operated exclusively by electricity and of street railways are not legal investments.
All other investments must consist of deposits in banks
or trust companies in Connecticut, New York, Massachusetts, or Rhode Island, or of loans secured by mortgage on unencumbered real estate in Connecticut worth
double the loan (1905, 231, 184, and 207; 1903, 171).
XI.—PENALTIES.

The general penalty stated under Banks and trust
companies applies to savings banks (3454). The penalty




106

Connecticut

— Savings

Banks

for officers who become personally interested in directing
savings bank investments is $1,000 (3446). The penalty
for failure by the treasurer to report unused accounts is
$100 (3451). In case of a violation of the statute, the
officials who assent to the violation are liable to the bank
for the loss it suffers. They are also subject to fine of not
less than $100 or not more than $1,000 (3453).




107

DELAWARE.
The banking statutes of this State are extremely meager.
In the Revised Code as amended to 1893 (this is the
latest revision of the statutes of the State) a chapter
(LXXI) is entitled, " Of Banks;" this chapter, with two or
three pages of later acts appended to it in the Code, contains little of importance. The subsequent session laws
have been examined through those of 1909. In 1903 an
act was passed providing for supervision over state banks,
savings banks, trust companies, etc. In 1909 branches
and reserves were provided for. There is not sufficient
separation of the three sorts of business in the statutes
to warrant separate headings.
I.—TERMS OF INCORPORATION.

Apparently banks in Delaware must still be chartered
by special act of legislature, for the general corporation
law denies to any corporation created under it the power
to carry on the business of discounting bills, notes, or
other evidences of debt, receiving deposits of money,
etc. (1903, chap. 394, 4).
Ill.—SUPERVISION .

The insurance commissioner of Delaware has supervision over all banks and trust companies (1903, chap.
330, 1). For the duties he performs as a banking supervisor he receives $500 a year (1903, chap. 330, 21). Whenever it appears to him that it is desirable that proceedings




108

Delaw

are

— General

Provisions

should be brought against " s t a t e banks, savings banks,
trust companies, and safe deposit corporations and other
companies engaged in like business or in any manner
receiving deposits of money, " if the affairs of any corporation of these sorts are in an unsound condition from
illegal or unsafe investments, or it appears to him t h a t
its liabilities exceed its assets or t h a t it is violating t h e
law or t h a t it is inexpedient for it to continue business,
then it is t h e d u t y of the insurance commissioner, through
the attorney-general, to institute such proceedings against
the corporation as the situation requires; if from an
examination the commissioner has reason to believe t h a t
the corporation is in an unsafe condition, he m a y t a k e
possession of the corporation's property and retain it
until a receiver is appointed (1903, chap. 330, 5). H e
proceeds similarly against any b a n k or trust company of
which the reserve has fallen below the requirement, and
which, after t h i r t y days' notice from him, has not made
the reserve good. H e approves of reserve depositaries
(1909, chap. 162).
REPORTS.
The corporations enumerated in the quotation above
make to t h e insurance commissioner not less t h a n two
reports each year in the form prescribed by him showing
resources and liabilities at the close of business on a past
day specified by him; each report is transmitted to him
within t w e n t y days after the receipt of his request and an
abstract in the form prescribed by him is published in a
local newspaper. H e may call for special reports when he
thinks t h e m necessary for a complete knowledge of t h e
condition of any corporation (1903, chap. 330, 2).
" E v e r y savings b a n k or other incorporated institution
for savings'' m u s t annually publish once a week for three




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Commission

weeks a statement of its financial condition, presenting
the amount and nature of its business during the preceding year, with assets, liabilities, investments, etc. (Laws
of Delaware, p. 570).
EXAMINATIONS.

Whenever the insurance commissioner deems it expedient, or at the request of the corporation, he may examine
any of those corporations enumerated above under Supervision (1903, chap. 330, 4).
IV.—RESERVE REQUIREMENTS.

Every bank, and every trust company receiving deposits, must, if it does business in a city of over 50,000,
keep a reserve equal to 15 per cent of aggregate deposits,
exclusive of deposits on which there must be thirty days'
notice of withdrawal; one-third of this reserve must be in
money, and the part not held in money must be on deposit
in a Delaware bank or trust company having a capital of
$50,000 and a surplus of $50,000, approved by the commissioner, or on deposit in a bank or trust company
approved by him doing business in New York, Philadelphia, or Baltimore. Banks and trust companies doing
business elsewhere in the State must keep a reserve equal
to 10 per cent of deposits, exclusive of those on which
there must be thirty days' notice of withdrawal; the proportion of cash and the designation of depositaries are
the same as in the case of corporations located in cities of
over 50,000. While the reserve is below the requirement,
no new loans or discounts may be made except by discounting sight exchange, and no dividends may be
declared (1909, chap. 162).




no

D el aw ar e — General

Provisions

VII.—OVERDRAFTS.

Among t h e items required to be reported by t h e Farmers'
Bank of the State of Delaware, under a special statute,
is ' ' o v e r d r a f t s " (Laws of Delaware, p . 589).
VIII.—BRANCHES.

Branches are allowed only on t h e approval of t h e
insurance commissioner, who must ascertain t h a t t h e bank
has a paid-in capital of $25,000 for each place of business
then established, and for the proposed branch, and a
surplus of $25,000 for each place of business then established, and for the proposed branch; this act applies to all
corporations "possessing banking p o w e r s " (1909, chap.
163).
X.—UNAUTHORIZED BANKING.

No foreign corporation is deemed to possess t h e power
of discounting bills, notes, or other evidences of debt, of
receiving deposits, buying and selling exchange, etc.
(1903, chap. 395, 7).
Forming a banking company without incorporation is
forbidden, and any person who receives subscriptions t o
the capital stock of such a company, or subscribes, forfeits $500 t o any one who sues, one half to t h e use of t h e
State (Laws of Delaware, Chap. L X X I , 1). Any members or agents of such an association who loan money on
notes or receive money on deposit also forfeit $500 (Laws
of Delaware, Chap. L X X I , 2).
XI.—PENALTIES.

The act placing banks under the supervision of t h e insurance commissioner provides t h a t failure to report is
punishable b y a penalty of $100 a day (1903, chap. 330, 2);




in

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Monetary

Commission

that the making of a report with intent to deceive an examiner is a misdemeanor on the part of the director,
officer, or employee who does so (1903, chap. 330, 3); and
that any corporation doing business "in contradiction
of the provisions herein contained" is liable to a fine of
$1,000 (1903, chap. 330, 10). A statute in the amended
Code makes it a misdemeanor, punishable by fine, for
directors or managers of a bank to be concerned in paper
or security on which the bank makes a profit of more than
1 per cent for sixty days; the offending bank forfeits its
charter (Laws of Delaware, p. 588). Savings banks
which fail to publish the annual reports required suffer a
penalty of $200 for each omission (Laws of Delaware,
P- 57o).




112

DISTRICT OF COLUMBIA.
Most of the banking in the District of Columbia is done
by national banks or by foreign corporations. No district banks are provided for in the Code; savings banks
are briefly treated as to reports and examinations; and
only for trust companies is there legislation which is at all
comprehensive.
The digest is based upon Treasury Document No. 2505,
a pamphlet which reprints the national-bank act and
other laws relating to national banks, together with all
the provisions of the District Code relating to banking.
The pamphlet sets out in full a subchapter of the Code
dealing with the organization in the District of corporations of various sorts—manufacturing, agricultural, mining,
etc.; savings banks are incorporated under this statute
not by virtue of being expressly named in it, but merely
because they are not provided for separately. The chapter does provide, however, that " banks of circulation or
discount" may not be incorporated under it. The heading " Banks " is, of course, omited in the digest. Citations
are to sections in the Code according to the numbering
given in the reprint, which, though published in 1908,
includes, according to the assurance received by the compiler at the office of the Comptroller of the Currency, all
statutes affecting banking in the District passed previous
to the end of the first session of the Sixty-first Congress.
S. Doc. 3 53, 61-2




8

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Commission

SAVINGS B A N K S .
III.—SUPERVISION.

The Comptroller of the Currency exercises supervision
over "all savings banks, or savings companies, or t r u s t
companies, or other banking institutions, organized under
authority of any act of Congress to do business in t h e
District of Columbia, or organized b y virtue of t h e laws of
any of t h e States in this Union, and having an office or
banking house located within the District of Columbia
where deposits or savings are received. " W h e n in his
opinion it is necessary he m a y t a k e possession of such a
corporation for t h e same reasons and in the same manner
as is provided with respect to national banks (713).
REPORTS.

The corporations named in t h e quoted passage in t h e
paragraph above are required to make to the Comptroller
all t h e reports which national banks are required to make,
except t h a t banking institutions having offices in foreign
countries as well as in the District of Columbia are only
required to make these reports semiannually. Reports
must be published in Washington newspapers (713). The
national-bank requirement is five reports a year showing
resources and liabilities on a past day, and special reports
when demanded by the Comptroller (R. S., 5211), and a
report after each dividend showing its amount, and net
earnings not divided (R. S., 5212).
EXAMINATIONS.

The Comptroller of the Currency is authorized, whenever he deems it useful, to cause an examination to be
made of any of t h e corporations mentioned in t h e quoted
passage above (714).




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District

of Columbia — Trust Companies
XL—PENALTIES.

The penalty for failure to report is the same as t h a t
imposed on national banks for a like offense (713), $100 a
day during t h e delay (R. S., 5213).

TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

A corporation m a y be formed to carry on in the District
of Columbia " a safe deposit, trust, loan, and mortgage
business/' with a capital of a t least $1,000,000, and if the
company also does a storage business a capital of a t least
$1,200,000 (715). Trust companies m a y " a c c e p t deposits
of money for t h e purposes designated herein, upon such
terms as may be agreed upon from time to time with
depositors" (721). Of t h e capital stock a t least 50 per
cent must be paid in in cash or b y t h e transfer of assets
before business is begun, and within a year after availing
itself of t h e powers given b y the s t a t u t e each company
must have its entire capital stock paid in (728). Generally only money m a y be considered as p a y m e n t of capital;
b u t in t h e case of companies existing when the trust-company act was passed, and taking new charters under the
statute, t h e provision given above t h a t assets m a y be
accepted as p a y m e n t of capital m a y be taken advantage
of with respect to the assets of t h e old company transferred to t h e new (735). Shares are of $100 each (729).
See below under I I I t h e requirement of a deposit of securities before the corporation m a y " t r a n s a c t the business
of a trust company or any business of a fiduciary chara c t e r " (728 and 719).




"5

National

Monetary

II.—LIABILITIES

AND

DUTIES

Commission
OF

STOCKHOLDERS

AND

DIRECTORS.

Trust company stockholders are individually liable to
the creditors of their company t o an amount equal to and
in addition to t h e stock held, for all debts and contracts
of t h e company (734).
There must be from 9 to 30 directors, who must be
stockholders and at least one-half of t h e m residents and
citizens of t h e District (736). I n case of failure to make
the annual report provided for in section 730, t h e directors
are liable for all debts existing at the time of t h e delinquency and for all t h a t are contracted before t h e report
is made (731). They are liable as guarantors for all debts
existing or afterwards contracted, if a dividend is declared
which renders the company insolvent or creates a debt
against it (739). If liabilities exceed cash value of assets
the directors who assent to this condition are personally
liable for t h e excess to the creditors (741).
III.—SUPERVISION.

The Commissioners of the District of Columbia have
power to grant or withhold t h e charter of incorporation
(717). Before a corporation is entitled to " t r a n s a c t the
business of a t r u s t company, or to become and act as an
adminstrator, executor, guardian of t h e estate of a minor,
or undertake any other kindred fiduciary d u t y , " it must
deposit in securities with the Comptroller of t h e Currency
an amount equal to one-fourth of its paid-in capital; t h e
Comptroller m a y call for additional deposits not exceeding one-half t h e paid-in capital. No corporation m a y
" transact t h e business of a t r u s t company or any business
of a fiduciary character'' until it has the Comptroller's
certificate, which will not issue unless t h e required deposit
has been made (728 and 719).




116

District

of Columbia

— Trust

Companies

The Comptroller of the Currency has power, when in
his opinion it is necessary, to t a k e possession of any trust
company, for t h e same reasons and in t h e same manner
and to t h e same extent as is provided with respect to
national banks (713 and 720).
REPORTS.

Trust companies must report to the Comptroller as
national banks do (713 and 720): five times a year, showing resources and liabilities on a past day specified b y him,
with special reports when he requires them (R. S., 5211),
and after each dividend a report of its amount and the
amount of net earnings not divided (R. S., 5212). Every
trust company must annually, within twenty days after
the 1st of January, report to t h e Comptroller stating
amount of capital, proportion paid in, amount of debts,
gross earnings for the previous calendar year, and expenses; this report, on which t h e company's taxes are
based, m u s t be published in a local newspaper (730).
EXAMINATIONS.

The Comptroller of the Currency exercises " t h e same
visitorial p o w e r s " over trust companies as he does over
national banks (720). Trust companies are also mentioned in t h e section which authorizes the Comptroller,
whenever he deems it useful, to cause an examination of
savings banks, etc., to be made (714). The practice is to
examine trust companies which are in satisfactory condition twice a year.
VI.—INVESTMENTS.

A t r u s t company m a y hold real estate not exceeding in
value $500,000, and such in addition as it may acquire in
satisfaction of debts due it under sales, decrees, judgments,




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Commission

and mortgages; b u t it m a y not hold real estate under
foreclosure or real estate purchased to secure debts, for
longer t h a n five years (726).
X . — U N A U T H O R I Z E D T R U S T COMPANY B U S I N E S S .

No corporation organized under the laws of any of t h e
States and having its principal place of business in t h e
District m a y carry on any of the business named in the
trust-company chapter without compliance with t h e provisions of t h e chapter for t h e government of corporations
formed under it; each officer of an offending corporation
is punishable b y fine not exceeding $1,000, or imprisonment not exceeding one year, or both (747).
XI.—PENALTIES.

Failure to report subjects a trust company to the same
penalty as is imposed upon national banks for the same
offense (720 and 713), $100 a day during the delay (R. S.,
5213). See also 732 for false swearing and misappropriation of trust funds.




118

FLORIDA.
The General Statutes of Florida include all statutes
through the session of 1903, and in an appendix are
inserted the acts of 1905. Title 3 of the fourth division
of the statutes deals with corporations. In chapter 2 (Corporations for profit) of this title, subchapter 1 contains the
special provisions for banking companies. The first eleven
articles of this subchapter contain provisions applicable
to all banking companies. The twelfth article deals with
savings banks exclusively. The only pertinent later statute
is found at page 197 of the session laws of 1907. This act
also deals generally with banking companies, except in one
or two minor provisions. There is no law applicable to trust
companies as distinguished from other corporations. The
digest is accordingly divided under only two heads, "General provisions," which are applicable to all banks, and
"Savings banks." Numbers in parenthesis are citations
to the General Statutes of Florida, 1906; citations to the
later statute are by its number in the laws of 1907—that
is, 92—followed by the section in that law. The digest
includes legislation through the session of 1907; and the
compiler has been advised by Mr. A. C. Croom, comptroller of the State, that at the 1909 session of the legislature no statutes were passed affecting the matters covered
in the digest.




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GENERAL PROVISIONS.
I.—TERMS OF INCORPORATION.

Every banking company must have a capital of at least
$50,000, except that, with the approval of the comptroller,
banks may be organized in cities or towns of not more than
3,000 with a capital of at least $15,000, and, with the approval of the comptroller, they may be organized in cities
or towns of not more than 6,000 with a capital of $25,000.
The capital must be divided into shares of $100 each. Savings banks are in a measure excepted from this provision—
see I, under Savings banks (2697). At least 50 per cent
of the capital must be paid in in full before business is begun.
The remainder must be paid in in monthly installments
of at least 10 per cent of the whole capital (2698).
Dividends may be declared semiannually from net
profits. Before declaring a dividend one-tenth of the
net profits must be carried to surplus until it amounts to
20 per cent of the capital (2714). The capital must never
be impaired either by withdrawing dividends or otherwise (2715).
No banking company may ever become indebted to an
amount exceeding its capital stock except on the following
sorts of demands: First, money deposited with or collected
by the company; second, drafts against money due to the
company; third, liabilities to the stockholders for dividends and reserved profits (2712).
Apparently, commercial and savings banking may not
be combined, for the application for incorporation must
specify whether the business contemplated is "general
banking" or " savings banking" (2694).




Florida

— General

Provisions

I I . — L I A B I L I T I E S AND D U T I E S OF STOCKHOLDERS AND
DIRECTORS.

The stockholders of every banking company are individually responsible for the debts of the company to t h e ext e n t of t h e amount of their stock at par in addition t o t h e
amount invested in t h e shares (2700). If a banking comp a n y begins business before authorized by t h e comptroller,
its stockholders are personally liable as partners (2701).
Banking companies must have a board of not fewer t h a n
five directors (2704). Bach director must be a citizen of
t h e United States, and three-fifths of t h e directors m u s t be
residents of Florida for at least one year before their election and m u s t be residents during their continuance in
office. Bach director m u s t own a t least ten shares of stock
(2705). Where directors participate in a violation of law,
they become individually liable for all damages which t h e
company, its stockholders, or any other persons m a y sustain in consequence of t h e violation (2724).
III.—SUPERVISION.

The real supervision of banks is in t h e hands of t h e comptroller ; b u t he has power to employ a discreet and compet e n t person t o m a k e examinations. This inspector m a y not
be connected with any banking business (92, sec. 1); he
has a salary of $2,000 per year (92, sec. 2).
The comptroller must approve of the organization of
banks with a capital less t h a n the regular amount, $50,000
(2697). The comptroller examines t h e condition of each
company before he authorizes it to begin business, with a
view especially to ascertaining t h e amount paid in on its
capital, t h e names and residences of t h e directors, with the
stock they hold, and whether the company has complied
with law. If it appears t h a t t h e organization is for other




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t h a n legal purposes, t h e comptroller m a y withhold his certificate (2702). The comptroller approves of bonds in
which reserves m a y be invested (2711).
If he becomes satisfied from t h e reports furnished him or
from other good proof t h a t a banking company is insolvent
and is in default, or if t h e directors of a banking company *
assent to a violation of any of t h e provisions of law, the
comptroller applies to the courts for t h e appointment of a
receiver (2724). In case reserves are impaired t h e comptroller notifies the banking company to make good its reserve. If it fails in thirty days, he applies for a receiver
(2710); he does so if a banking company holds its own
stock over t h e time allowed (2713); or if its capital stock
is impaired, and after notice from him t h e impairment is
not made good within three months nor liquidation begun
(2716); or if t h e capital is impaired b y cancellation for unpaid assessments and not increased to t h e required amount
on thirty days' notice (2699) \ o r ^ a n Y losses or irregularities apparent from an examination are not made good b y
the directors of t h e banking company to t h e satisfaction of
t h e comptroller at once (92, sec. 5); or if a b a n k fails t o
pay its examination fees within sixty days after notification of the amount due (92, sec. 6); or if he is dissatisfied
with the report of a banking company going into voluntary
liquidation (92, sec. 4).
REPORTS.
The s t a t u t e of 1907 provides t h a t ' e v e r y bank, banker,
banking firm, banking company, branch bank, or association doing business in this State, except national b a n k s
(this is the phraseology of all t h e general sections in t h e
act of 1907), m u s t make complete reports t o t h e comptroller
whenever and in whatever form he prescribes, and must
publish in a local newspaper in J a n u a r y and July of each
year a full statement of assets and liabilities (92, sec. 7).




Florida

— General

Provisions

This act repeals only the laws or parts of laws in conflict
with its provisions. I t is worth noticing, therefore, t h a t it
had been provided in t h e general statutes t h a t every banking company should make report to the comptroller not
more seldom t h a n twice a year, exhibiting its resources and
liabilities at t h e close of business on any day specified b y
the comptroller, this report to be submitted within five
days after receipt of t h e comptroller's request; also, t h a t
t h e general statutes allowed him to call for special reports,
and provided t h a t all banks, bankers, etc., receiving money
on deposit should advertise every J a n u a r y in a local newspaper the amount of their capital stock and personal property owned and subject to p a y m e n t of their liabilities (2718
and 2719).
A receiver, within thirty days after taking charge of t h e
assets of a banking company, m u s t forward to t h e comptroller a full report of its assets and liabilities, including
a list of t h e stockholders, t h e number of shares owned by
each, t h e names of t h e depositors, t h e amounts of deposits,
a list of assets, and such other information as t h e comptroller requires. From then on the receiver makes
monthly reports containing complete details (92, sec. 3).
If a banking company goes into voluntary liquidation, it
first furnishes the comptroller with a detailed statement
of its affairs, following this with a similar detailed statement every m o n t h until its liabilities have been settled in
full (92, sec. 4).
For t h e reports required for purposes of taxation, see
435 J 437 (including trust companies), and 2720.
EXAMINATIONS.

All bankers, firms, or companies are examined at least
once a year b y t h e person appointed by the comptroller.
(This is subject to a difference in the case of savings
banks.) The examinations m a y be oftener if they are




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deemed necessary (92, sees. 5 and 6). The person making
examination reports in detail to t h e comptroller t h e condition of t h e b a n k examined (92, sec. 1). There is a preliminary examination before a certificate of incorporation is granted (2702).
IV.—RESERVE

REQUIREMENTS.

E v e r y banking company m u s t keep in lawful money of
t h e United States a reserve equal t o 20 per cent of its
deposits. Three-fifths of this 20 per cent reserve m a y
consist of balances, payable on demand, due from b a n k s
in other cities with whom the company keeps its current
accounts, or m a y consist of bonds of t h e United States,
of Florida, or of municipalities of Florida if these bonds
are approved b y t h e comptroller. W h e n the reserve falls
below 20 per cent, the company m u s t not increase its
liabilities except b y discounting or buying sight bills of
exchange, and m u s t not declare dividends (2710 and 2711).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

Banking companies m a y not m a k e any loan or discount
on security of shares of their own stock unless it is necessary t o prevent loss upon a previous d e b t ; if stock is so
acquired it m u s t be gotten rid of within six m o n t h s
(2713)For restrictions on borrowing, see I, supra.
VI.—INVESTMENTS .

Banking companies m a y only hold such real estate as
is necessary for immediate accommodation in t h e transaction of business; such as is conveyed in satisfaction of
previous debts; and such as is purchased under judgments or mortgages running to the purchaser or is purchased to secure debts due t h e purchaser (2707).




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F l o r i d a

— S a v i n g s

Banks

No banking company m a y purchase its own shares
unless the purchase is necessary to prevent loss on a previous debt, in which case t h e stock m u s t be sold within
six months (2713).
VIII.—BRANCHES.

Any banking company m a y establish branches or
agencies in any city or town in Florida, t h e capital being
joint and used b y the mother b a n k and the branches in
definite proportions. Six m o n t h s ' public notice m u s t be
given of t h e discontinuance of any branch (2709).
X.—UNAUTHORIZED BANKING.

Banks not organized and doing business under t h e laws
of Florida or under t h e national banking laws, and " a l l
persons or corporations doing t h e business of bankers,
brokers, or savings institutions," are prohibited from
using the word b a n k or any other title which would imply
t h a t they are incorporated banking institutions. Illegal
use of words implying t h a t the b a n k is an incorporated
institution under t h e s t a t u t e entails a penalty of $50 a
day (2728).
XI.—PENALTIES.

Insolvency, or violation of law, entails forfeiture of all
franchises and privileges (2724). Banks failing to report
are subject t o a penalty of $100 a day during t h e delay
(92, sec. 7).
SAVINGS B A N K S .
I . — T E R M S OF INCORPORATION. *

The general a m o u n t of capital required of all banking
companies is $50,000, b u t savings banks m a y be formed
with a capital of not less t h a n $20,000. The capital of




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savings banks m a y be divided into shares of not less t h a n
$10 each (2697).
III.—SUPERVISION.
EXAMINATIONS.

Savings banks are examined at least twice a year (92,
sec. 6).
V.—DISCOUNT,

L O A N , AND D E P O S I T R E S T R I C T I O N S .

A committee or board of investment in each savings
bank, charged with t h e d u t y of investing its funds, is
apparently contemplated by t h e general statutes. No
member of this committee or officer whose d u t y it is to
invest the bank's funds m a y borrow of the savings bank,
or become owner of real estate mortgaged to the b a n k
(2735). No savings bank nor any person acting in its
behalf m a y t a k e a consideration of any sort on account
of a loan m a d e b y t h e savings b a n k other t h a n appears
on t h e face of t h e contract of loan (2736).
Savings banks m a y receive deposits from any one person until they a m o u n t to $2,000, a n d m a y allow interest
on t h e deposits until t h e principal and accrued interest
a m o u n t to $3,000; this limitation, however, does not apply
t o deposits b y religious and charitable associations (2729).
VI.—INVESTMENTS.

The capital and deposits of savings banks m a y be invested only as follows: First, in first mortgages of Florida
real estate to an a m o u n t not to exceed 60 per cent of t h e
valuation of t h e real estate. Not more t h a n 75 per cent
of t h e whole a m o u n t of deposits m a y be thus invested,
and no loan on mortgage m a y be made except on t h e
report of two members of t h e board of investment.
Second, in t h e public funds of t h e United States, or bonds




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Florida

— Savings

Banks

of any State, or securities of any American municipality
whose indebtedness does not exceed 5 per cent of the
valuation of its property, or in notes of any citizen of
Florida with a pledge of the securities just mentioned at
no more than their par value. Third, in first-mortgage
bonds of any railroad incorporated under the laws of one
of the United States and located in that State, if the
railroad is in possession of its own road and has paid
dividends for two years; or in the first-mortgage bonds
of a railroad, so incorporated and located, guaranteed by
another such railroad; or in the bonds or notes of a railroad incorporated under Florida law which is unencumbered and has paid 5 per cent dividends for two years;
or in the notes of any Florida citizen with a pledge of
these securities at no more than 80 per cent of their par
value. Fourth, in the stock of any Florida State bank,
or any national bank, or in the notes of a Florida citizen with a pledge of these securities at no more than
80 per cent of their market value and not exceeding their
par value. Savings banks may deposit sums not exceeding 30 per cent of their deposits on call in Florida banks,
national banks, or Florida or United States trust companies; and they may take interest on these deposits.
Fifth, in loans on personal notes of depositors secured by
the depositor's book; not more than three-fourths of the
amount of the deposit may be thus loaned. Sixth, in
case the funds of the bank can not be conveniently invested as above provided, then not more than one-third
of the funds may be invested in bonds or other personal
security payable in a time not less than a year, with two
sureties, if the principal and sureties are all citizens of
Florida. Seventh, 10 per cent of the deposits of a savings bank, but not more than $25,000, may be invested
in a building for its business (2733).




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XI.—PENALTIES.

The member of the investment committee of a savings
bank, or officer in charge of investments, who borrows
from the bank or becomes owner of real estate on which
the company holds a mortgage, forfeits his office (2735).
Whoever violates the provisions of the section forbidding
savings banks or persons negotiating for savings banks
to take a consideration for procuring a loan from the savings bank is liable to a penalty of from $100 to $1,000
(2736).




128

GEORGIA.
The last revision of the laws of Georgia is the Code of
1895. In the Code, beginning at section 1903, is an article,
"Banks," many sections of which deal with circulation
and have therefore been omitted. A supplement to the
Code was published in 1901, including all legislation through
the session of 1900; in this are found sections concerned
with banks, many of them dealing with circulation, and
also a chapter, beginning with section 6458, which is concerned with trust companies. The numbers of the sections
in the supplement follow consecutively after those in the
third volume of the Code of 1895; moreover, the supplement has a complete index, to the Code as well as to itself,
which has been used in preparing the digest. In the later
session laws are found a few amendments, culminating in
act No. 84 of 1907, which creates a bank bureau, besides
legislating on many topics with regard to banks; since
this act merely repeals all laws and parts of laws in conflict with its own provisions, it is a matter of some doubt
what sections of the Code it supersedes—in clear cases code
sections have been omitted. Savings banks are not separately legislated for. Trust companies receiving deposits
are, under 1907, No. 84, 8, subject to all laws regulating
banks. The session laws have been examined through
those of 1908, and the compiler has been assured by Mr.
S. Doc. 353, 61-2




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J. P. Brown, state bank examiner, that at the 1909 session no laws were passed affecting the matters covered by
the digest. In the parentheses in the digest the Roman
numeral indicates the volume of the Code, IV being the
supplement; the Arabic figures following are sections in
the volume given. References to the session laws are by
year, number, and section.
BANKS.
I.—TERMS OF INCORPORATION.

The minimum capital for banks is $25,000, of which not
less than 20 per cent, and in no case less than $15,000,
must be paid in in cash before organization (II, 1910).
Dividends may be declared only from net profits (II,
1968); and any shrinkages in capital due to losses are
charged to profit and loss, so that notes and bills discounted shown as debts due the bank are live and collectible assets (II, 1917).
II.—LIABILITIES AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

Stockholders are individually liable to the amount unpaid on their shares for all the corporation's debts, and all
stockholders, above the face value of the shares they hold,
are individually liable to depositors in the bank for all
moneys deposited in an amount equal to the face value
of the shares (II, 1911).
There must be not fewer than three nor more than fifteen directors, each the holder of one or more shares of
stock (1903, No. 446). There must be at least one meeting
every three months, and at one meeting every six months
the directors must have a thorough examination made;




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S t a t e

Banks

they then require that all back debts be collected or well
secured and that no debt be held twelve months without
interest being paid, or, unless well secured, put in suit or
charged off (1907, No. 84, 25).
III.—SUPERVISION.

There is in the department of the treasury a bank bureau charged with supervision of banks and enforcement
of banking laws (1907, No. 84, 1). The treasurer of the
state is also state bank examiner; he holds office for the
same term as his treasurer's term, and receives a salary of
$2,500 for being examiner (1907, No. 84, 2). Neither the
state bank examiner nor his assistants may be officers or
stockholders of banking corporations or firms or be engaged individually in banking business in the United States
(1907, No. 84, 7).
Whenever it appears that the capital of a bank or trust
company doing business under the banking act has been
impaired over 10 per cent, the examiner notifies the corporation to make the impairment good within ninety days
(1907, No. 84, 15). If any bank or trust company refuses
to comply with requirements of the examiner for thirty
days after his demand, it may be proceeded against by the
examiner for revocation of its authority to do business
(1907, No. 84, 12). The proceedings for forfeiture are begun by the attorney-general at the request of the governor, and if the court decrees the bank's charter to be forfeited, then a receiver may be appointed (1907, No. 84, 13).
Any bank doing business under the statute of 1907 may
place its affairs voluntarily under the control of the examiner (1907, No. 84, 14). Whenever any officer of a bank
refuses to submit to examination, or obstructs examination, a receiver may be appointed (1907, No. 84, 16). If
from examination or report it appears that a bank is




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insolvent, it is t h e d u t y of t h e examiner to report t h e insolvency t o t h e governor, and when ordered by t h e governor,
to t a k e possession of t h e bank. H e t h e n makes a thorough
examination, and if satisfied t h a t t h e b a n k can not resume
business or liquidate its debts, he reports again t o t h e governor, who then institutes, through the attorney-general,
proceedings for a receiver. When directed b y the governor
the state examiner m a y appoint a special assistant to t a k e
charge of the bank until a receiver is appointed, b u t in
no case m a y this official retain possession of t h e b a n k ' s
affairs for longer t h a n sixty days (1907, No. 84, 27).
REPORTS.

Every b a n k and t r u s t company must m a k e a t least four
reports a year, and more if called upon by t h e examiner.
The reports must, in the form prescribed by him, show resources and liabilities at the close of business on a past day
specified b y t h e examiner; must be sent to him within ten
days after receipt of his request; a n d must be published,
as he prescribes, in a local newspaper (1907, No. 84, 10).
Receivers report and make publication as t h e banks themselves would (1907, No. 84, 17), besides making annual returns of receipts and disbursements t o court (1907, No. 84,
13). Once a year a list of names and residences of shareholders in every bank, with t h e number of shares held b y
each, is t r a n s m i t t e d to t h e examiner (1967, No. 84, 28).
The examiner m a y call for records of meetings of directors
(1907, No. 84, 25).
The state treasurer, in his capacity of state b a n k examiner, makes an annual report to t h e governor (1907, No.
84,18), which includes a s u m m a r y of t h e condition of b a n k s
and trust companies doing a deposit business from which
he has had reports, with any other information in relation
to these corporations which he thinks m a y be useful; a
statement of banks and t r u s t companies whose business




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S t a t e

Banks

has been closed during the year; suggestions for amendments to banking laws; and details of department administration (1907, No. 84, 20). If the governor thinks these
reports of sufficient importance he may require them published in newspapers of the State (1907, No. 84, 19). Occasions when the examiner is required to report to the governor the insolvency of individual institutions against
whom receivership proceedings are to be brought were
stated above (see also 1907, No. 84, 22).
EXAMINATIONS.

The state bank examiner, or his subordinate, visits
every bank and trust company twice each year and oftener, if necessary, in order to make a careful examination
into its condition (1907, No. 84, 23). It is a provision of
the Code, apparently not repealed by the act of 1907, that
the examinations must not be at stated times, and must be
without warning (II, 1922). He must examine also banks
in the hands of receivers once every six months and file
the results with the court (1907, No. 84, 17); but the
compiler is advised by the state bank examiner that this
provision is not enforced, on the theory that the bank in
the receiver's hands is actually in the custody of the
court appointing him. At a meeting of directors at least
once every six months a thorough examination is made
by the directors or by an auditor, after which the directors act as stated under II, supra (1907, No. 84, 25).
The special examinations made to determine the solvency
of banks against which receivership proceedings are about
to be brought were explained above.
IV.—RESERVE REQUIREMENTS.

"No bank or corporation doing a banking business"
may reduce its "cash on hand, including amount due by
banks and bankers, and the market value of all stocks




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and bonds actually owned and held below 25 per cent
of demand deposits" (II, 1915). This is as near as the
statutes come to a reserve requirement.
V.—DISCOUNT AND LOAN RESTRICTIONS.

Among the powers given banks is that " t o lend money
upon personal security or upon pledges of bonds, stocks,
or negotiable securities " (II, 1907).
"No bank or corporation doing a banking business"
may loan to any one person without ample security more
than 10 per cent of its capital and surplus; in this section
surplus is to be construed net profits (IV, 6158).
"No bank or corporation doing a banking business"
may loan to any officer without good collateral or other
ample security, and if such a loan exceeds 10 per cent of
the capital it must be approved by a majority of the directors (1905, No. 89). The Criminal Code makes it a misdemeanor for an officer or agent of a bank to borrow money
from the bank without permission of a majority of directors (III, 212), or for an officer or agent of a bank to lend
money to another officer or agent without permission of a
majority of directors (III, 213). In so far as No. 89 of
1905 is in conflict with the two sections of the Criminal
Code last cited, it must, as being later legislation, be
taken to repeal them.
VI.—INVESTMENTS.

Every bank may hold " such real and personal property
as may be necessary for its uses and business" (II, 1907).
Capital stock must not be applied by any bank to the
purchase of its own shares (II, 1968).
VIII.—BRANCHES.

Bank is defined to include in certain cases "the parent
bank, its branches, if any," etc. (II, 1967). As further
evidence that branches are allowed in Georgia, note that




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S t a t e

Banks

the bank bureau is created to examine the condition,
among other institutions, of all "branch banks" (1907,
No. 84, 1).
XI.—PENALTIES.

Every bank or trust company failing to make and publish the regular quarterly or special reports is subject to
a penalty of $50 a day (1907, No. 84, 11). Receivers of
insolvent banks failing to report or allow examination are
subject to the penalties provided for officers or employees
of banks (1907, No. 84, 17).
If the state bank examiner or his assistant neglects his
duty, makes a false statement, or is guilty of misconduct
in office, he loses his office and is guilty of a misdemeanor
(1907, No. 84, 32).
It is a misdemeanor for an officer or employee of a bank
to certify a check for which no sufficient funds are on
deposit (1907, No. 84, 25). It is a misdemeanor for an officer or agent of a bank to borrow money of the bank without permission of a majority of the directors (III, 212), or
to lend the money of the bank to another agent or officer
without permission of a majority of the directors (III,
213), but see V, supra, for the later statute authorizing,
under certain restrictions, loans of this sort to be made.
The Penal Code also makes the following offenses punishable by imprisonment of from one to ten years:
Violation by a bank director or officer of the provisions of
the bank's charter (III, 204); fraudulent insolvency in
which the president and directors of the bank are implicated (III, 206); receipt of deposits by officers who know
their bank to be insolvent (III, 207); and purchase with
capital stock of the bank's own shares (III, 211). The
following offenses are punishable by imprisonment of from
four to ten years: Conveyances, etc., in defraud of creditors by directors or officers of a bank (III, 208); purchase




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by a director, officer, or agent of paper issued by the bank
for a less sum than appears due on its face (III, 209); and
declaration, in which president or directors are implicated,
of a dividend out of any funds except net profits (III, 210).
SAVINGS BANKS.
There is no distinct legislation for savings banks. They
are referred to in the trust company provisions, where it
is provided that "any savings bank" having a paid-in
capital of not less than $100,000, previously incorporated
by the legislature, with authority to exercise trust powers,
may take advantage of the trust company provisions (IV,
6466); this would imply that savings banks are institutions with capital stock. The only other mention made
of them seems to be in section 2391 of volume II of the
Code, where it provides that "all the provisions of this
article are to apply to all savings institutions which pay
interest to depositors and whose deposits are not subject
to check.'' The article referred to is article 8 of chapter
2 of title second; the article is entitled "Corporations
created by superior court." Section 2350 of the article,
however, declares that the superior courts of Georgia
have power to create corporations, except for various
purposes, among which is banking.
TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

Trust companies may not receive deposits subject to
check on demand, nor may they discount commercial
paper, until they have complied with the laws regulating
the incorporation of banks; but once those laws have been
complied with, trust companies may acquire all rights
and privileges and "be subject to the same liabilities and




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Trust

Companies

restrictions as apply to banks" (IV, 6462). It is similarly provided in the statute of 1907 that a trust company
receiving deposits under its charter is subject to the
requirements of the state examiner, must make reports,
and must conform " t o all the laws enacted regulating
chartered banks in this State" (1907, No. 84, 8). All
the statutes explained under Banks must, therefore, hold good for trust companies that do a banking business.
The capital of a trust company must never exceed
$2,000,000 and must be divided into shares of $100 each
(IV, 6465). At least $100,000 of capital must have been
paid in before business is begun (IV, 6462).
II.—LIABILITIES

AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

Trust companies doing a banking business are, it appears, subject to the rule for double liability of stockholders.
See also provisions under Banks for directors. It is
provided in the trust company provisions that every trust
company must have a board of trustees of not less than
five nor more than fifteen (IV, 6463).
III.—SUPERVISION.

Trust companies that do a banking business are subject to the same rules for supervision by the examiner, for
reports to him, and examinations by him or by his subordinate (1907, No. 84, 8). Several of the sections dealing with supervision include trust companies in terms
(1907, Nos. 84, 10, 23, etc.).
IV.—RESERVE REQUIREMENTS.

See the provision given under this head under Banks,
the language of which is "bank or corporation doing a
banking business" (II, 1915).




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V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

Among trust company powers is t h a t " t o loan money on
real estate or personal securities" (IV, 6461). T h e prohibition on loans to any one person, unless amply secured,
amounting t o more t h a n 10 per cent of capital and surplus (see V, Banks), seems applicable t o trust companies
on t h e strength of its own language, " b a n k or corporation doing a banking business " (IV, 6158). The language
of t h e prohibition upon loaning to an officer without good
security, and of t h e requirement t h a t if the loan exceeds
10 per cent of capital it must be approved b y a majority
of directors, is t h e s a m e — " b a n k or corporation doing a
banking business" (1905, No. 89). (See also Banks.)
VI.—INVESTMENTS .

Trust companies may hold all real estate necessary in
the transaction of their business or acquired in satisfaction of debts due the corporation under sales, judgments
or mortgages or in settlement of debts due t h e corporation. Trust companies m a y b u y and sell "stocks, bills
of exchange, bonds and mortgages, and other securities"
(IV, 6461). (See also Banks.)
XI.—PENALTIES.

See X I , Banks, for penalties upon trust companies doing
a banking business. The penalty for failure to report is
framed to include trust companies (1907, No. 84, 11).
Among the penal provisions, t h a t for receiving deposits
while insolvent applies to any b a n k or " a n y company or
individual doing a banking business in this S t a t e " (IV,
207); and t h e provisions against an officer's or an
employee's borrowing or loaning to another officer or
employee apply t o " a n y b a n k or other corporation" (IV,
212 and 213). B u t see Banks, V, for the limitation on
this prohibition enacted b y act No. 89 of 1905.




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IDAHO.
The bulk of the statute law of Idaho on banking is in
chapter 13, "Banking corporations," of title 4, "Corporations," of the Civil Code of 1908. Chapter 12 of the
same title, "Guaranty title and trust companies," contains a few provisions concerned with trust companies,
and chapter 13 contains some provisions specifically confined to savings banks; but for the most part chapter 13 is
applicable to banks, savings banks, and trust companies.
The first section of the chapter (2968) provides for regarding as a bank any person, firm, or corporation, except
national banks, having a place of business in Idaho where
credits are opened by the deposit or collection of money
or currency, subject to be paid upon order, or where
money is loaned on stocks, bonds, bullion, or commercial
paper, or where stocks, bonds, bullion, or commercial
paper are received for discount or sale. Since the provisions of the chapter apply to all who fall within this
classification, all the provisions of the statute presented
below under the heading " B a n k s " must be taken to be
equally applicable to savings banks and trust companies.
Under the headings "Savings banks" and "Trust companies," accordingly, are given only such few provisions as
apply to them exclusively. The digest includes all statutes
through the session of 1909.




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BANKS.
I . — T E R M S OF INCORPORATION.

Banking corporations may have departments for b o t h
regular banking and savings banking (2991). When a
corporation does b o t h regular and savings banking, however, it m u s t account in separate books for each kind of
business; and its transactions of a savings character will
be governed b y t h e law applicable to savings banks, its
business of an ordinary banking nature by t h e provisions
in t h e s t a t u t e applicable to t h a t sort of bank (2995).
Corporations, firms, and individuals doing a banking
business m u s t have property of a cash value as follows:
I n communities of less t h a n 2,000, $10,000; 2,000 to 3,000,
$20,000; 3,000 t o 5,000, $25,000; 5,000 to 10,000, $30,000;
10,000 to 25,000, $50,000; over 25,000, $100,000. This
property m a y be in money, commercial paper, and necessary realty and personalty, which must be unencumbered
(2970). Foreign banks to do business in Idaho m u s t
maintain at their office capital satisfying t h e above
requirements; they are subject, moreover, to t h e other
provisions of t h e chapter (2982 and 2983).
At least 50 per cent of t h e capital of every b a n k m u s t
be paid in before it begins business and t h e remainder
m u s t be paid in monthly installments of 10 per cent of the
whole capital until t h e a m o u n t of property paid in satisfies t h e requirements given above (2973).
Dividends m a y be declared out of net profits after providing for expenses, b u t before a dividend is declared n o t
less t h a n one-tenth of t h e net profits for t h e preceding
dividend period m u s t be carried to surplus until t h e surplus amounts t o 20 pe** cent of t h e paid capital (2981).




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S t a t e

II.—LIABILITIES

AND D U T I E S

OF

Banks

STOCKHOLDERS

AND

DIRECTORS.

T h e stockholders of banks in addition to t h e amount
invested in their stock are liable to the creditors to an
a m o u n t equal to t h e par value of their stock (2979).
Directors, of whom there must be not less t h a n five,
must own $500 par value of stock (2970 and 2980).
Directors who permit officers or employees to borrow in
an excessive or dishonest manner or in a manner t h a t
entails risk of loss are liable individually for the damage
suffered in consequence by t h e corporation or any person
(2989).
Ill.—SUPERVISION .

The bank comftiissioner is the state official overseeing
banking. His term is four years; he must have h a d at
least five years' practical experience in banking business
or have served for five years in the banking department of
some State. H e must have no interest in any b a n k in
Idaho (189). His salary is $2,400 a year (192). Neither
he nor his assistants m a y disclose information obtained
in the business of t h e department except in t h e course of
their d u t y (3008).
Whenever it appears from a report or an examination
t h a t a bank's capital is impaired the commissioner requires t h e b a n k to make good the deficiency. If this is
not done, or if t h e bank, when given notice of a violation of
law, does not discontinue the violation, or if t h e commissioner has cause to consider t h e bank insolvent, he applies
to t h e court for a receiver (3004 and 3005).
REPORTS.
Banks report a t least twice a year to t h e bank commissioner in t h e form prescribed by him, exhibiting in
detail t h e resources and liabilities of t h e bank on some




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past day specified by t h e commissioner. The report
m u s t be transmitted to t h e commissioner within ten days
of the receipt of his request for it. An abstract of this
report must be published within thirty days in a local
newspaper. The commissioner m a y call for special reports
when he thinks t h e m necessary, b u t not more t h a n three
each year (2999).
Every other year every institution in which deposits
are made makes a statement t o the bank commissioner
showing deposits t h a t have been dormant for ten years,
the amount of each deposit of this sort, t h e residence of
the depositor, and the date of his death, if t h a t is known.
Notices of these deposits m u s t be published in local newspapers. If t h e depositor is known b y t h e president of
the bank to be living, or if t h e deposit is of less t h a n $50,
no report of it need be made to t h e commissioner. The
material in these reports of unclaimed deposits must
appear in the b a n k commissioner's report (2997).
Banks and trust companies m a y become depositaries
of county or state funds. When serving in t h a t capacity
they are required to make monthly reports to t h e state
and county financial officials (127-136; and 2013-2022).
The bank commissioner files t h e reports, furnishes
blank forms for them, and reports annually t o t h e governor, with a copy of the published abstract of t h e last
report of each bank, with a statement of all proceedings
of his, with a general outline of t h e condition of banking
business in the State, and with such other matters as he
thinks t h e public are interested in (3000).
EXAMINATIONS.

The bank commissioner examines the condition of each
bank before giving it a certificate t o do business (2975).
When he deems it necessary, and at least annually, t h e
bank commissioner visits all banks without notice. H e




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Banks

examines t h e affairs of each bank and makes a complete
report of it (3001).
IV.—RESERVE

REQUIREMENTS.

Reserves m u s t be not less t h a n fifteen per cent of
demand liabilities, b u t of this fifteen per cent one-half
may consist of balances due "from good solvent b a n k s "
(2998).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

The liabilities to a bank of one person, firm, or corporation, including in the liability of a corporation or
firm the liabilities of its members, must never exceed
25 per cent of the capital, surplus, and undivided profits
of the bank, b u t discount of commercial paper is not
considered as lending money for this purpose, nor is a
loan counted, where securities representing actual value,
real estate, warehouse receipts, bills of lading, etc., have
been hypothecated (2987).
Firms and individuals may not carry as an asset the
obligation of the firm or individual or a member of t h e
firm. No employee of a banking corporation may loan
to himself any of t h e bank funds without the approval
of a majority of the directors (2989).
See VI, below, for the restriction upon a b a n k ' s taking
its own stock as collateral (2976).
VI.—INVESTMENTS.

Banks m a y purchase real estate only for t h e following
purposes: First, necessary business use, b u t real estate
held for this purpose must not exceed 50 per cent of capital, surplus, and undivided profits; second, real estate received in satisfaction of previously contracted debts;
third, real estate purchased by t h e bank at sale under
judgments or mortgage foreclosures where the bank was
holder of the lien as security (2978).




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No bank may accept as collateral or purchase its own
capital stock, except when the transaction is necessary to
prevent loss on a previous debt; and in that case the stock
must be sold within twelve months (2976).
XI.—PENALTIES.

The following are misdemeanors: Failure by the president of a banking institution to report unclaimed deposits
(2997); wilful overdraft by an employee of a savings bank
(7118); receipt of deposits with knowledge of the insolvency
of the depositary (7119).
The following are felonies by the bank commissioner:
Malicious institution of proceedings, or institution without
reasonable cause; for this the commissioner answers to
the bank for damages and is also punishable by fine not
over $1,000, imprisonment not over two years, or both
(3005): disclosure of official information by the commissioner or an assistant; for this the penalty is forfeiture of
office and a fine of not over $1,000 with imprisonment
until it is paid (3008).
Wilful certification of a check for which no funds are
on deposit entails a fine of $1,000 (2988).
Foreign corporations and their employees who violate
the statute forfeit $1,000 in addition to the regular penalties (2984).
Penalty for fraudulent receipt by the owner or officer
of a bank of deposit with knowledge that the bank is
insolvent is $1,000 fine, imprisonment not exceeding two
years, or both (2985).
SAVINGS BANKS.
VI.—INVESTMENTS.

Savings banks or other institutions with savings departments may invest their capital and the money deposited
only as follows: First, in securities of the United States;




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Companies

second, in securities of Idaho; third, in securities of
municipalities of Idaho, but not more than 50 per cent of
the assets of any savings bank may be securities of any
one municipality; fourth, in securities of any State or any
city of any State that has not for three years before the
investment defaulted on any interest payment, but not
more than 50 per cent of the assets of any savings bank
may be invested in securities of any one State, or of any
municipality outside Idaho; fifth, in mortgages on unincumbered real estate worth double the loan; sixth, in real
estate, subject to the other provisions of the statute on
that topic, but no savings bank may have more than 50
per cent of its capital invested in the lot and building in
which it does business; seventh, in dealing in exchange by
purchasing and selling sight and time drafts and notes;
eighth, awaiting opportunity to invest, the deposits may
be loaned on well-secured commercial paper, stocks, and
other securities, but the loan must not exceed 80 per cent
of the market value of the security (2992).
TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

Guaranty, title, and trust companies must have a paidup capital of not less than $25,000 (2963).
VI.—INVESTMENTS .

Guaranty, title, and trust companies may hold in trust
and as security estate, real and personal, including the
obligations of corporations. They may invest their funds
in the purchase of real and personal securities and may
loan money on real and personal security; they may purchase and sell real estate (2961).

S. Doc. 353, 61-2




10

145

ILLINOIS.
In the Revised Statutes of Illinois, 1906, by Hurd, chapter 16a is entitled "Banks," although the act which is
made into that chapter was entitled "An act concerning
corporations with banking powers." Chapter 16a was
amended by an act found at page 52 of the laws of Illinois for 1907. The digest treats the amendments as
though actually incorporated in the chapter, and refers to
sections in the chapter simply by their number, since
most of the references are within it. In chapter 32,
sections 129-147 deal with trust companies; the act
embodied in those sections was one " t o provide for and
regulate the administration of trusts by trust companies."
References to these sections and to other sections in the
Revised Statutes not in the chapter on banks are by page
in the Revised Statutes followed by the number of the
section as numbered on that page. The sections dealing
with trust companies have not been amended since the
Revised Laws were published. There is no special legislation for savings banks; the chapter on banks provides
that "all corporations with banking powers" are subject
to its provisions, and banks organized under it are allowed
to receive savings deposits and to do a trust business.
Trust companies, unless organized as banks, may not do
a banking business.




146

I l l i n o i s

— S t a t e

Banks

The constitution of the State, Article XI, section 5,
provides that all acts authorizing or creating corporations
or associations with banking powers, and amendments to
such acts, must be approved by a majority of the votes
at the popular election following their passage in the
legislature. The statutes have been examined through
those of 1909.
BANKS.
I.—TERMS OF INCORPORATION.

The minimum capital for banks is as follows: In cities
or towns of not more than 5,000, $25,000; in those of from
5,000 to 10,000, $50,000; in those of from 10,000 to 50,000,
$100,000; in those of 50,000 or more, $200,000 (11). The
auditor does not grant his certificate of organization unless
the capital stock has all been fully paid in (5). The
language of sec. 25c? on page 671 shows that commercial
banks may receive savings deposits; it provides that no
"savings bank, individual, or individuals doing banking
business, banking company, or incorporated bank receiving
savings deposits" may become guarantor. Banks may,
upon qualifying under the trust act and making the
required deposit, accept and execute trusts (1).
II.—LIABILITIES

AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

Stockholders are individually responsible to creditors to
an amount equal to the shares held, over and above the
stock itself, for all liabilities accruing while they remain
stockholders (6, and constitution, Art. XI, sec. 6).
Directors must own at least ten shares of stock. They
must hold regular meetings at least as often as monthly
(4). If directors participate in illegal loans they become




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personally liable for damages which anyone may suffer
by their violation of the statute (10).
III.—SUPERVISION.

There is no special banking supervisor; supervision is
in the hands of the auditor of public accounts. He superintends authorization to begin business and may withhold
a certificate if he is not satisfied of the personal character
of the incorporators, or if he has reason to believe the bank
is organized for other than a legal purpose (5). When
capital stock becomes impaired, the auditor notifies the
bank to make good the impairment. If, after thirty
days, this has not been done, he must sue stockholders of
the bank for their proportion of the sum necessary to
make the impairment good. If it appears from reports
or examinations that the impairment can not be made
good, or that the bank is conducting business in an unsafe
manner, the auditor may at once, through the attorneygeneral, bring proceedings for a dissolution and the
appointment of a receiver (11). The auditor exercises
supervision over consolidations and voluntary dissolutions (13 and 15). Examiners may not be financially
interested in banks they examine (8).
REPORTS.

At least once every three months (see constitution,
Art. XI, sec. 7) the auditor calls for a report, which must
be transmitted within five days. It must show the resources and liabilities of the bank before beginning business on the morning of any day the auditor may choose.
The report is published in a local newspaper (7). Directors must furnish the auditor with lists of stockholders
and copies of any other records he may require (4). Lists
of stockholders and transfers must be filed with the local
recorder of deeds (6, and constitution, Art. X I , sec. 8).




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I l l i n o i s

—

S t a t e

Banks

Receivers of banks are required to make report generally three times a year to the appointing court (p. 1614,
1 and 2). These reports they must send also to the
auditor (11).
(For reports required for purposes of taxation see page
1648, 35 et seq.)
EXAMINATIONS.

A thorough examination is made by the auditor or a
subordinate before a bank begins business to ascertain
that its capital is paid up, etc. (5). Regular examinations
are made at least once a year, and oftener if the auditor
thinks necessary, by a suitable person appointed by him.
This examiner must not be interested in any bank which
he is directed to examine (8).
V.—DISCOUNT AND LOAN RESTRICTIONS.

The total liabilities to any bank of a person, corporation,
or firm for money borrowed, including in corporation or
firm liabilities those of the members, must not exceed 15
per cent of capital and 15 per cent of surplus. The total
liabilities of any such person, corporation, or firm must
not exceed 30 per cent of the paid-in capital. Undivided
profits are not to be construed as part of the surplus.
Discount of commercial paper is generally not considered
as money borrowed. No bank may loan to any of its
officers or employees, or to corporations or firms in which
they are actively interested, until the loan has been approved by the directors (10).
VI.—INVESTMENTS.

Banks may hold and carry as assets the necessary real
estate in which they do their banking business, and such
other real estate as is acquired in the collection of debts,




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but, except that used as a banking house, real estate must
not be carried as assets for a longer period than five
years (9).
XI.—PENALTIES.

Directors and employees who make false statements in
order to deceive examiners are punished by imprisonment
of from one to ten years (4). Receipt of deposits with
knowledge of a bank's insolvency is embezzlement, punishable by fine of double the amount of the sum embezzled,
and in addition imprisonment of from one to three years
(p. 670, 25a). There is a $100 a day penalty for delay in
reporting (7).
SAVINGS BANKS.
The only special provisions for savings banks are in the
Criminal Code (p. 671); 25c, on that page, provides that
no loans may be made by savings banks to their officers,
on penalty of forfeiture of charter or fine of twice the
amount of the loan, and that the officers receiving the
loan be punished as for receipt of money under false pretenses; 25<i forbids any savings bank to become guarantor
on evidences of indebtedness. (Under an opinion of the
attorney-general of the State, dated January 5, 1906, 25c is
inapplicable to banks created under the general banking
chapter; since there are no "savings banks" beyond
these, the section becomes practically inoperative.)
TRUST COMPANIES.
III.—SUPERVISION.

Trust companies are required to deposit with the
auditor, for the benefit of their creditors, securities to
amounts varying according to the size of the city (p.
539, 6). When it appears to the auditor from examination or report that a trust company has violated the law




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Illinois

—

Trust

Companies

or is conducting its business unsafely, he must direct the
discontinuance of the practices; if the corporation neglects to report or to comply with such an order, or if it
appears to the auditor that the corporation should be
stopped, or that its depositors' interests are in danger, or
that an officer has been guilty of misconduct, or that a
serious loss has occurred, he institutes, through the
attorney-general, whatever proceedings the case requires (p. 541, 13). If the auditor has evidence that a
report is false, he revokes the certificate of authority of
the corporation (p. 541, 14).
REPORTS.

Trust companies file with the auditor every January a
statement of their condition on December 31 preceding,
showing the following items: Assets, including items of
real estate; cash on hand and on deposit; cash in the
hands of agents; loans on mortgages and bonds constituting a first lien on real estate on which there is less than
a year's interest owing, and such loans on which there is
more than a year's interest owing; amount due on judgments; stocks and bonds of Illinois, of the United States,
of Illinois municipalities, and other stocks and bonds with
values; loans on pledge of securities, particularized; and
other assets. Liabilities, including capital, surplus, undivided profits and deposits; an account of trusts held;
and such other information as the auditor requires (p.
540, 9). The auditor causes an abstract of this annual
report to be published in a Springfield newspaper and in
a local newspaper (p. 541, 16). The auditor may address
any inquiries or ask for any reports; the companies must
act promptly on such requests (p. 540, 11). Every two
years the auditor embodies in his report to the legislature
the result of examinations of trust companies (p. 540, 12).




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EXAMINATIONS.

The auditor, personally or by an examiner, investigates
the affairs of every trust company annually or, if he
thinks necessary, oftener. Inquiry is made as to the
condition of resources of the corporation; how it conducts
its business; its investments; its safety and prudence;
security given; its obligations; and its compliance with
law (p. 540, 12).
V.—DISCOUNT, LOAN, AND DEPOSIT RESTRICTIONS.

The amount of money which any trust company may
have on deposit at one time must not exceed ten times its
capital and surplus, nor may its outstanding loans at any
time exceed that amount (p. 539, 3).
XI.—PENALTIES.

Any violation of the act dealing with trust companies
subjects the offender to a penalty of $500 for each offense,
and the additional sum of $100 a day is forfeited for failure
to file a report (p. 541, 15).




152

INDIANA.
All the Indiana statutes, except acts passed at a special
session in 1908 and at the regular session of 1909, during
which two sessions there was no legislation affecting
banks, are in Burns' Annotated Indiana Statutes, revision
of 1908. Chapter 15, ''Banks/ 7 is divided into four articles: Article I, "Banks of discount and deposit;" Article
II, "Savings banks;" Article III, "Private banks," and
Article IV, "Bank examiners." Chapter 37 is entitled
"Corporations—Loan and deposit companies;" the provisions of this chapter, however, deal in terms with
" loan and trust and safe deposit companies." The article
on private bankers is summarized briefly in a paragraph
at the end of "Banks." All the references in the digest
are to sections in the revision of 1908.
BANKS.
I.—TERMS OF INCORPORATION.

Banks are given power to act as trustee (3332), but the
statutes seem silent on the question whether banks of
discount and deposit may receive savings deposits. There
is no requirement that commercial banks receiving interestbearing deposits should handle them subject to savingsbank rules, as trust companies which receive savings
deposits are required to do.
Banks must have a capital of not less than $25,000,
divided into shares of $100 each (3329). Banks must




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Commission

n o t do business until 50 per cent of t h e capital has been
actually paid in; t h e rest must be paid within six m o n t h s
(3332 a n d 3335).
Ten per cent of t h e annual net profits of every b a n k
m u s t be set a p a r t by the directors as a surplus fund until
it amounts t o 25 per cent of t h e capital. Dividends m a y
be declared semiannually out of net profits, b u t no capital
m a y be withdrawn (3337).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

Shareholders in a t a n k are individually responsible t o
an a m o u n t above their stock, equal to its par value, for
all liabilities of t h e b a n k (3337, and constitution, Art. X I ,
sec. 6).
Directors m u s t each own a t least five shares of stock
(3334) • There must be not less t h a n three nor more t h a n
nine directors (3343). They must meet a t least once a
m o n t h (3333)III.—SUPERVISION.

There is no official in charge merely of banking. The
state auditor performs t h a t duty, assisted by four examiners whose appointment is provided for in the statutes
(3418 et seq.). No examiner m a y disclose, outside of his
d u t y , the names of depositors, amounts on deposit,
or other information concerning private accounts of
depositors in banks, savings banks, or t r u s t companies
(3422); nor m a y any examiner be a director or other
officer in an association he examines (3346).
When t h e auditor has reason to believe t h a t t h e capital
stock of any b a n k is impaired, he requires t h e deficiency
t o be m a d e good. If the bank does not make t h e impairment good within sixty days by assessment or sale of
stock, t h e auditor reports to t h e attorney-general, who




154

I n d i a n a

—

S t a t e

Banks

institutes proceedings to wind up the bank (3341). If
it appears from an examination that a bank is insolvent,
or that its assets are being improperly used, the auditor
directs the examiner who has reported the insolvency, or
some other appointee, to take charge of the affairs of the
bank; and he proceeds in court for a receiver. If a bank
fails or suspends between periods of examination, the
auditor proceeds similarly. Failure to pay an assessment
for an examination is cause for the appointment of a
receiver (3346 and 3419).
REPORTS.

A statement of each bank's financial condition is annually published for two weeks in a local newspaper (3344).
Not less than five regular reports are made every year, according to the form prescribed by the auditor, exhibiting the
resources and liabilities of the bank at the close of business
on a past day specified by the auditor. The report must
be sent to him within five days after receipt of his request.
The report is published in a local newspaper. Special
reports may be called for whenever the auditor desires
(3347). Banks in the hands of a receiver report as solvent banks do (3346 and 3419). For statements required
for purposes of taxation see 10210.
EXAMINATIONS.

One of the examiners appointed by the auditor examines
each bank as often as is deemed necessary. The examiners report to the auditor, especially in case the bank
is in such condition that he should proceed against it, as
stated above (3346 and 3419). Banks in the hands of
receivers are subject to the same examinations (3346 and
3419). The auditor examines the affairs of a bank before
it is allowed to reduce its capital stock (3336).




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V.—DISCOUNT AND LOAN RESTRICTIONS.

It is a felony for a director or employee of a bank to
borrow the bank's funds without the consent of the
directors (2296).
VI.—INVESTMENTS.

Banks may hold such real estate as is necessary for
their accommodation in business; such as is mortgaged
to them; such as is conveyed to them in satisfaction of
previous debts; and such as they purchase under judgments or mortgages to secure debts due them. Except
the real estate necessary for their accommodation, banks
must get rid of what they purchase within five years
(334o).
VII.—OVERDRAFTS.

Directors, employees, etc., of banks who knowingly
overdraw their accounts without the written consent of
the directors being indorsed on the check are guilty of a
felony (2295).
VIII.—BRANCHES.

The legislature has power to charter " a bank with
branches" (constitution, Art. XI, sec. 4), but under the
banking chapter, the articles of association of each bank
of discount and deposit must state " the place where it is
to be located," etc., indicating that a single office was
contemplated (3329).
XL—PENALTIES.

Receipt of deposits or other things of value during
insolvency is embezzlement, punishable by a fine of double
the value of the receipt, imprisonment of from two to
fourteen years, disfranchisement, and forfeiture of the
right to hold any office of trust or profit for any determi-




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— Private

Banks

nate period (2294). Overdrafts by an officer without the
consent of the directors is a felony, punishable by imprisonment for from two to fourteen years, and fine of double
the amount of the overdraft (2295). The director or
officer who borrows funds of the bank without the consent of the board of directors is guilty of a felony, punishable by imprisonment of from two to fourteen years, and
fine of double the amount of the loan (2296).
A bank that fails to transmit a regular or special report
to the auditor suffers a peualty of $100 a day (3347).
The penalty for failure by the president and cashier of a
bank to publish annually for two weeks in a local newspaper a statement of the bank's condition is a fine of
from $25 to $1,000 (3345)The examiner who discloses information had upon examination is guilty of a misdemeanor, punishable by fine
of not more than $100.
PRIVATE BANKS.
Capital.—Partnerships and individuals transacting a
banking business, or advertising as bankers, must have
at least $10,000 of cash capital, invested in well-secured
notes, in state or municipal bonds, or in bank building
and furniture (3403). An individual or a partnership must
issue certificates of stock to the individual, or the members of the firm, as though the organization were a corporation (3405). Individual bankers must be residents
of the State (3404). Supervision.—Partnerships and individuals must make to the auditor two reports a year, according to the forms he prescribes, showing in detail resources and liabilities at the close of business on a past
day specified by the auditor. They must transmit the
report within five days after receipt of his request.
Reports are published in a local newspaper in a form




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Commission

similar to reports of incorporated banks. The auditor
may call for special reports (3408). Once in twelve
months, or oftener if necessary, examiners make an examination of each private bank. If it is found to be
insolvent, or if its assets are being reduced, the examiner
notifies the auditor, who may thereupon direct the examiner or some other appointee to take charge of the
bank, pending the appointment of a receiver. Failure
between periods of examinations, or suspension, is also
cause for putting the bank into the hands of an appointee
of the auditor, pending the appointment of a receiver.
If a bank fails to pay an assessment for an examination, it
may be put into the hands of a receiver (3409). Loans.—
No private bank may loan to any of its officers an amount
exceeding 30 per cent of its capital (3414). Investments.—
Not more than one-third of the capital may be invested
in real estate, except such as is taken in settlement of
debts or purchased at judicial sales (3403). Penalties.—
Failure to report within five days from the request entails a penalty of not less than $100 nor more than $500
(3408). There is a general penalty for violation of the
provisions dealing with private banks, which is a fine of
not over $1,000, with imprisonment for not longer than
two years for a second offense (3410). The penal provision for receipt of deposits during insolvency applies
to individual bankers (2294).
SAVINGS BANKS.
I.—TERMS OF INCORPORATION.

The incorporators of a savings bank must be voters of
Indiana, citizens of the county where they reside for at least
five years, and severally ov/ners of unincumbered realty
in the county worth at least $5,000 (3348). Apparently,
the statutes contemplate associations without capital




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— Savings

Banks

stock (3349). A local judge must, after diligent inquiry,
be satisfied of t h e qualifications of the incorporators as
suitable men to conduct a savings bank (3350).
The trustees of every savings bank m u s t set aside every
year from gross gains not less t h a n one-half of 1 per cent,
nor more t h a n 3 per cent, of t h e deposits, as a surplus
fund, until this fund equals 10 per cent of t h e deposits.
The surplus m a y accumulate, if t h e b a n k desires it, until
equal to 25 per cent of t h e deposits (3375 and 3381).
Dividends must not be declared except from profits
(3377)- No dividends are declared on deposits of over
$5,000 (3379). The trustees m a y discriminate so as to
give to deposits under $1,000 a higher interest t h a n to
those over $1,000, and so as to give higher dividends to
depositors who leave their deposits undiminished (3380).
After expenses and surplus contributions have been deducted from profits, all t h a t remains must be, so far as
is practicable, divided among depositors (3381). If any
residue is still undistributed it must be divided among
depositors at least once in every three years as equitably
as possible, as t h e trustees direct (3382).
I I . — L I A B I L I T I E S AND D U T I E S OF T R U S T E E S .

Trustees m u s t meet at least every three months (3360).
A local judge must certify to their fitness for the position
(3355)- If a trustee of a savings bank neglects his duties,
or borrows from the corporation, or misses meetings for nine
months, he forfeits his position (3353). Trustees m u s t not
receive p a y unless they are engaged in work which requires
their regular and faithful attendance at the bank, in which
case t h e salary is voted by the trustees, exclusive of t h e one
interested (3362 and 3396). Also after a savings b a n k has
accumulated a surplus of not less t h a n 5 per cent of its deposits, it m a y p a y t h e trustees who render special personal
service a compensation determined upon by t h e trustees




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a n d approved by the auditor. Interested trustees do not
vote. This special p a y m u s t not be granted if t h e surplus is impaired (3397). When a savings b a n k has accumulated a surplus of 15 per cent of its deposits it m a y
p a y trustees who have attended every regular meeting
during the year a gratuity of not more t h a n $3 a meeting
(3398). If a trustee or other officer of a savings bank,
b y his misconduct, wastes t h e bank's assets, he is responsible for t h e losses to the depositors and other creditors
(3401)III.—SUPERVISION.

As before, the auditor is general supervisor. H e
appoints examiners as subordinates, who m u s t not disclose the information they obtain in examinations (3418
and 3422). The qualifications of incorporators of a
savings b a n k must be inquired into by a local judge.
They must appear trustworthy to him, or he will not go
through t h e necessary preliminaries to their getting a
certificate (3350). When extra compensation is given
officers and trustees of savings banks, t h e auditor m u s t
approve (3396 and 3397). The auditor passes upon t h e
necessity of extending the time for notice of withdrawal
of deposits (3364) and also passes on t h e cost of t h e savings bank's building (3372); he m a y suspend savings
b a n k trustees (3383), subject to the later action of a
court (3385)Whenever a savings b a n k fails for thirty days t o p a y
its depositors, or when it appears to the satisfaction of
t h e auditor t h a t its business is being mismanaged, a n d
t h a t it is insolvent or in danger of insolvency, then it is
t h e d u t y of the auditor t o institute proceedings for a
dissolution. The court applied to m a y decree a receivership (3401).




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Banks

REPORTS.

Savings banks make an annual report to t h e auditor of
their condition on J a n u a r y i, after the dividend of t h a t
day has been allowed (3387). I n this report the total
a m o u n t of assets are stated: The a m o u n t loaned on notes,
bonds, and mortgages; interest on loans; value and rate
of interest on all stock investments; stock investments,
the interest on which is in arrears; bonds, notes, and
mortgages, the interest on which is in arrears; bank
stock held by a savings b a n k ; commercial paper held;
real estate held, and its value; income derived from real
estate; cash on hand or on deposit; names of depositaries and interest received; average monthly balances on
deposit in b a n k s ; and any other items of assets. Also
liabilities, including amounts due depositors, dividends,
and any other debts which m a y become a charge upon
assets. Also t h e number of open accounts; amounts deposited and amounts withdrawn during the year; whole
a m o u n t of interest earned; expenses; new accounts
opened and accounts closed (3388 and 3389). The
auditor prescribes t h e form and m a y call for other items
(3390). I n years when the legislature is in session t h e
auditor reports to the legislature the condition of every
savings b a n k from which he has received a report in two
years; he m a y suggest amendments to the savings b a n k
law (3393)EXAMINATIONS.

One of t h e examiners, as often as is necessary, and at
least every other year, visits every savings bank without
giving it warning of t h e examination (3394 and 3420).
No compensation m a y be voted to a trustee of a savings
b a n k until the auditor has caused an examination of its
affairs to be made, showing t h a t the required surplus has
been accumulated (3397). The trustees of every savings
S. Doc. 353, 61-2




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Monetary

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bank, b y a committee of not less t h a n three of them,
examine its affairs yearly as a preliminary to rendering
t h e report t o t h e auditor (3395).
IV.—RESERVE

REQUIREMENTS.

The trustees m a y keep in reserve not more t h a n 20 per
cent of total deposits without investment, or they m a y
deposit t h a t a m o u n t on call with or without interest, in
an Indiana b a n k or a national bank (3369).
V . — D I S C O U N T , L O A N , AND D E P O S I T R E S T R I C T I O N S .

No trustee or officer of a savings bank m a y borrow
any of the funds of the bank, nor m a y a trustee or officer
indorse loans to others, so as to become in any way an
obligor on a loan b y the savings bank. No trustee or
officer m a y receive any commission for procuring a loan
from the b a n k (3362). Pending an opportunity t o
invest, loans may be made on stocks and securities
which are a proper investment, if the loan is of not
more t h a n 90 per cent of t h e cash value of t h e securities (3367). Loans m a y not be m a d e on security of
real estate or on notes or bills without the consent of a
majority of t h e trustees or t h e unanimous consent of t h e
investment committee (3370). (See other loan restrictions inserted under VI because so classified in t h e
statute.)
Savings banks need not receive sums less t h a n $1 or
exceeding $500 in any one year from any one depositor
(3363). Savings banks m a y require, as is usually provided in savings b a n k statutes, certain notice of withdrawal of deposits. There is t h e unusual provision here,
however, t h a t , with the consent of t h e auditor, if it is
necessary t o prevent a run, savings banks m a y require
any time not exceeding six months as notice of withdrawal (3364).




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— Savings

Banks

VI.—INVESTMENTS.

A savings bank m a y hold such real estate as is requisite for the transaction of its business, and from a portion
of this it may receive an income, such as is mortgaged
to the savings bank, and such as it purchases a t judicial
sales on claims in favor of t h e savings bank, or purchases
to prevent loss on debts due it (3371). The banking
house m u s t not cost more t h a n 5 per cent of t h e amount
of t h e deposits of t h e savings bank, and t h e estimates for
it must be approved b y t h e auditor (3372). Except its
banking house, every savings b a n k must, as a rule, dispose of its real estate within three years after acquiring it (3373). There is a prohibition on t r a d e and commerce (3374)Investments for savings banks are as follows: First,
securities of t h e United States; second, securities of Indiana; third, securities of municipalities of Indiana;
fourth, securities of any S t a t e in the Union t h a t has for
five years paid interest regularly; fifth, bonds or notes
secured by mortgage of unincumbered realty situated in
Indiana, or in a county, in an adjoining State, adjoining
the county where t h e b a n k is situated, if t h e real estate
is worth twice t h e loan; sixth, commercial paper payable
at an Indiana b a n k and having not more t h a n twelve
months to run, made or indorsed by a t least two freeholders, one of whom a t least is a resident of Indiana,
b u t no such bill or note m a y exceed $10,000, a n d no
more t h a n $10,000 may be loaned on the same security;
seventh, in real estate subject to t h e limitations in t h e
preceding paragraph; eighth, in dealing in sight and
time exchange, payable outside t h e S t a t e ; b u t no draft
may be for more t h a n $10,000, nor m a y any time draft
payable outside t h e State be purchased which has more
t h a n sixty days to run. Moreover, not more t h a n one




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draft may be held by any savings bank at one time,
secured by any of the same indorsers (3366). Pending
an opportunity for investment, money may be loaned on
the stocks and other securities just enumerated, if the
loan does not exceed 90 per cent of the market value of
the securities (3367). Although 3366 provides that only
the securities enumerated are legal investments for savings banks, the list of assets in savings bank reports
includes stock in other banks (3388).
XI.—PENALTIES.

If a savings bank fails to report, the employee whose duty
it was to report is fined from $1 to $50 for every day's
delay (3392). It seems likely that the penal provisions
concerned with receipt of deposits during insolvency,
overdrafts by officers, and loans of funds to officers may
apply to savings banks. The language of these statutes
makes them applicable to persons, firms, corporations, etc.,
" doing a banking business " (2294, 2295, and 2296, given
under Banks, XI).

TRUST COMPANIES.
I.—TERMS OF INCORPORATION;

Trust companies may not only do a commercial banking
business (4953) but may also apparently receive savings
deposits, for it is provided that every loan and trust and
safe deposit company which receives savings deposits
must do so under the regulations to which savings banks
are subject (4962).
The capital stock of corporations organized under the
loan and trust and safe deposit company statute must be
as follows: In cities of over 50,000, not less than $100,000;
in cities of from 25,000 to 50,000, not less than $50,000;
in cities of less than 25,000, not less than $25,000. Shares




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— Trust

Companies

are of $100 each. The capital must never exceed
$2,000,000 (4944). Business must not be begun until the
whole capital, provided it does not exceed $100,000, has
been paid in (4948).
II.—LIABILITIES AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

Stockholders are individually liable, in addition to their
holdings of stock, in a sum equal to that amount for the
payment of any debt of the corporation left unpaid after
its assets have been exhausted (4947, and possibly
constitution, Article XI, sec. 6).
There must be not less than six directors, a majority of
whom must be citizens of the State, and each of whom
must own at least ten shares of stock (4949).
III.—SUPERVISION.

The auditor and his examiners (see Banks, III) have
supervision of trust companies. If it appears from examinations that a trust company has violated the law, or is
conducting its business unsafely, or is insolvent, the
auditor directs a discontinuance of the unsafe or illegal
practices. If the trust company fails to report after ten
days' notice, or to comply with an order, or if it appears
to him that the corporation should stop transacting business, or that it is insolvent, then the auditor institutes,
through the local prosecuting attorney, such proceedings as
he institutes against an insolvent corporation (4959).
REPORTS.

Every year each trust company reports a detailed
account of its condition on or before April 1 to the auditor,
and publishes a condensed statement of such account in a
local newspaper. Statements must be rendered also to




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courts t h a t appoint the company to a fiduciary position
(4957). For t a x reports see 10210.
EXAMINATIONS.
These are made b y an examiner, without notice t o t h e
company, as often as is necessary, and at least once every
six months (3421 and 4958). The auditor also causes an
examination t o be made when t h e capital stock is reduced
(4945).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

Directors, officers, and employees of a trust company
are forbidden to become in any manner indebted t o t h e
trust company (4956 and 2997).
VI.—INVESTMENTS.

A trust company m a y hold such real and personal
property as is necessary for t h e convenient transaction
of its business; real estate acquired on foreclosure sale
or in settlement of an obligation may be held for t h e best
interests of the company; t h e company m a y purchase at
foreclosure or judgment sale (4953). There is a provision
against engaging in commerce, manufacture, etc. (4956).
VII.—OVERDRAFTS.

I n forbidding directors, officers, and employees to
become indebted to their trust company, t h e enumeration
of t h e possible ways in which they m a y become indebted
includes " by means of any overdraft" (4956).
X.—UNAUTHORIZED BANKING.

All persons and corporations not organized under t h e
trust-company law are prohibited from using t h e word
" t r u s t " in their name. The penalty for violation is $50
a day while the word is used (4960).




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Companies

XI.—PENALTIES.

Directors or officers of a loan and trust and safe deposit
company who loan its funds to any director or officer
and any director or officer who borrows from t h e company
are guilty of a misdemeanor, punishable by a fine of not
less t h a n $100 nor more t h a n $500 and imprisonment of
not less t h a n t h i r t y days nor more t h a n six months (2297).
Trust company directors who loan t h e company's funds
to a director, and also the borrowing director himself, are
guilty of a misdemeanor (2297). The fact t h a t this penal
provision, directly following 2294, 2295, and 2296 (receipt
of deposits when insolvent, overdrafts b y officers and loans
of funds to officers—see Banks, X I ) , includes trust companies expressly suggests t h a t t h e three sections named
m a y not be applicable to trust companies.




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IOWA.
The statutes of this State t o d a t e are in t h e A n n o t a t e d
Code of Iowa, 1897, in the supplement of 1907, a n d in t h e
session laws of 1909. Citations in the digest are t o sections in t h e Code, treating changes made b y a m e n d m e n t s
which appear in t h e supplement as incorporated in the
code itself. Three chapters of Title I X (Of corporations)
are concerned with banking: Chapter 10, Of savings b a n k s ;
chapter 11, Of state b a n k s ; and chapter 12, Of banks.
Trust companies are mentioned only in one or two sections.
Since t h e whole of chapter 12 applies b o t h to banks and
to savings banks, it has been m a d e t h e subject of a separate heading in the digest, " G e n e r a l provisions;" chapter 11 is digested under t h e heading " B a n k s , " and chapter
10 under t h e heading " Savings banks; " t h e few trust company provisions are p u t under a heading, " T r u s t companies."
Constitutional provisions require t h a t an act of assembly
authorizing or creating corporations with banking powers
be passed b y a majority of voters a t an election (constitution, art. 8, sec. 5), and m a k e every stockholder " i n a
banking corporation or i n s t i t u t i o n " individually liable in
an amount equal to t h e shares held, in addition to t h e m ,
for all debts accruing while he is a stockholder (constitution, art. 8, sec. 9). T h e compiler of the Code, however,
cites cases to t h e effect t h a t these provisions of t h e constitution apply only to banks of issue (70 N. W., 752; 63
Iowa, 11).




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— General

Provisions

GENERAL PROVISIONS APPLICABLE TO BANKS
AND SAVINGS BANKS.
II.—LIABILITIES AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

All stockholders of savings and state banks are individually liable to the creditors of the corporation above the
amount of stock held by them, to an amount equal to their
shares, for all liabilities accruing while they remain stockholders (1882). (See statement of the constitutional provision on this point in the paragraph above.)
Officers may receive a reasonable compensation, but no
director as such may be paid for his services (1869) • The
board of directors of every bank must at its annual meeting appoint from its members an examining committee of
not less than two, who make all examinations and report to
the board (1871). If the directors of a bank whose capital
is impaired do not proceed when notified by the auditor to
make it good by assessment and sale, they are individually
liable for the deficiency (1880).
III.—SUPERVISION.

The auditor of the State is in charge of banking. None
of the six examiners (appointed by the auditor with
salaries of $1,800 each per annum) may examine a bank
or loan and trust company in a county in which he is interested in banking or trust company business (1875, amd. by
1909, chap. 115; and 1876). When it appears to the
auditor that a bank has refused to pay its deposits, or has
become insolvent, or that its capital has become impaired,
or that it has violated the law, or is conducting its business in an unsafe manner, he orders a discontinuance of
the illegal and unsafe practices. If the bank refuses to
comply with his orders, or if he becomes satisfied that the




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b a n k is insolvent or unsafe, or t h a t the interests of creditors
require it to be closed, he authorizes one of his bank examiners t o t a k e possession of the bank, and applies to court
for a receiver (1877). When the capital of any b a n k is
impaired the auditor may require an assessment upon t h e
stockholders. When so ordered, the directors of the b a n k
m u s t cause the deficiency to be made good by assessment
and, where t h a t is unpaid, sale of the stock of t h e shareholder assessed (1878); if they fail to proceed thus, a
receiver m a y be appointed (1880). In case a director,
officer, or employee is guilty of intentional fraud, or of deception with regard to means or liabilities, or of participating in t h e p a y m e n t of dividends which leave insufficient
funds to meet liabilities, not only is the guilty person punished, b u t t h e b a n k m a y be closed b y proceedings in court
(1888). For violations of section 1889 corporations forfeit their charter (see X I , infra).
The auditor exercises
supervision over renewals or extensions of t h e period of
corporate existence of banks (1618 et seq).
REPORTS.

Banks are required to transmit a statement of their
condition to t h e auditor within ten days after receiving
his request. The following are the items: Capital paid
in; debts due all persons other t h a n regular depositors;
a m o u n t due depositors, including both sight and time
deposits; deposits by t h e b a n k subject to draft a t sight,
specifying location of depositaries and amounts of deposits; coin and bullion; legal tender, national b a n k notes,
etc.; drafts a n d checks on other solvent banks, a n d other
cash items; bills, bonds, and other evidences of debt discounted or purchased by t h e b a n k ; value of real and personal property specifying t h e a m o u n t of each; undivided
profits; and t h e total a m o u n t of liabilities of directors to
t h e b a n k (1872). Reports m u s t be a t least quarterly;




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General

Provisions

b u t the provision is t h a t the auditor m a y examine any
bank when he thinks proper or he m u s t call upon it for a
report on a given past day as often as four times a year
and must cause t h e report to be published in a local newspaper (1873). H e has power to call for special reports
whenever he thinks t h e m necessary to obtain a complete
knowledge of t h e condition of the bank (1874). The
president and cashier of every b a n k keep a list of names
and residences of officers, directors, and stockholders,
with the number of shares held b y each; they transmit a
copy of this list t o t h e auditor within ten days after each
annual meeting (1889). The examining committee m u s t
make four examinations a year, of which one m u s t be in
J u n e and another in December; the results of these two
examinations are reported to the auditor (1871). For
reports required for purposes of taxation, see 1322.
In his biennial report to the governor, the auditor is
required to state the condition of every bank from which
he has had reports for the past year and to suggest changes
.in the laws (1881).
EXAMINATIONS.

The provision for examinations or reports referred t o
above reads as follows: " T h e auditor of State may, a t a n y
time he m a y see proper, make or cause to be made an examination of any savings or state bank, or he shall call upon
it for a report of its condition upon any given day which
has passed, as often as four times each year," etc. (1873).
" T h e board of directors of each savings and state b a n k
shall, a t its annual meeting, appoint from its members an
examining committee of not less t h a n two, which shall
examine t h e condition of the bank, a t least every q u a r t e r , "
and report to t h e board; two of these quarterly examinations are reported to the auditor. In case any b a n k fails
to furnish reports of these two examinations, the auditor




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m a y have an examination m a d e b y one of his regular
examiners (1871).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

T h e total liabilities to a n y b a n k of a person, company,
or firm, for money borrowed, including in company or
firm liabilities those of the members, must not exceed 20
per cent of t h e paid-in capital of t h e b a n k ; b u t a b a n k
m a y loan, in an a m o u n t not exceeding one-half its capital,
to any person, company, or firm, on mortgage of unincumbered farm land in Iowa worth a t least twice t h e
a m o u n t of t h e loan, and t h e discount of bills of exchange
drawn against existing values or of paper owned b y those
negotiating it is not considered money borrowed (1870).
Officers a n d employees of b a n k s m u s t not borrow except
upon t h e express order of the board of directors m a d e in
t h e absence of t h e applicant; t h e same security m u s t be
required from t h e m as from others. The board of directors, however, m a y authorize loans to a director not
holding a n y other office, nor being an employee, not t o
exceed sum a t a n y one time a m a x i m u m fixed b y t h e resolution of the board; the director in question m u s t not be
present when t h e vote is taken, and m u s t give t h e same
security as is required of others (1869).
State and savings banks m a y contract indebtedness
only for expenses of transacting business, for deposits,
a n d to p a y depositors; except t h a t b y order of t h e directors further liabilities not in excess of t h e capital stock
m a y be incurred (1855a).
X.—UNAUTHORIZED BANKING.

No corporation m a y engage in the banking business,
receive deposits, and transact t h e business generally done
b y banks unless it is subject t o t h e provisions of Title I X




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—

General

Provisions

(Of corporations), or other banking laws of the State, except t h a t loan and trust companies m a y do certain banking business. Any corporation violating t h e section of
which this provision is a p a r t forfeits its charter, and t h e
corporation, its officers, directors, and agents are punished
by a fine of not less t h a n $500, or imprisonment for n o t
less t h a n two years, or both (1889).
XI.—PENALTIES.

An officer or employee of a b a n k violating t h e provisions against loans to an officer or employee is guilty of
embezzlement, and suffers imprisonment not exceeding
ten years, or fine not less t h a n the amount embezzled, or
b o t h penalties (1869). Any officer whose d u t y it is t o
make a report is guilty of a misdemeanor if he fails to do
so, punishable b y fine of from $100 to $1,000 or imprisonment from three months to three years (1886). Directors,
officers, and employees who make false entries or reports
with intent to deceive an examiner, or who divert t h e
funds of t h e b a n k to other objects t h a n those authorized
by law, are fined not more t h a n $10,000, and imprisoned
from two to five years (1887). Directors, officers, and
employees who are guilty of intentional fraud, or of deceit
in relation t o liabilities, etc., or of assisting in t h e p a y m e n t
of excessive dividends, are punished b y a fine of not less
t h a n $500, imprisonment of not less t h a n one year, or
b o t h (1888). Section 1889 provides t h a t any corporation
which violates it shall forfeit its charter, and its officers,
directors, and agents shall be punished b y a fine of not
less t h a n $500, imprisonment for not less t h a n two years,
or b o t h ; t h e provisions of the section include t h a t requiring a list of officers, directors, and stockholders to be kept
and transmitted to the auditor; t h a t forbidding corporations to engage in banking business except under t h e




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law; and those subjecting t r u s t companies to t h e rules
applicable to savings banks and state banks in certain
respects (see Trust companies, infra).
The officer, director, etc., who receives deposits knowing
his b a n k is insolvent is guilty of a felony punishable by
line not exceeding $10,000, imprisonment in t h e penitentiary for not more t h a n ten years, or imprisonment in the
county jail for not more t h a n one year, or b o t h fine and
imprisonment. Among the sorts of institutions subject to
this rule are banks, deposit offices, and corporations
receiving deposits (1884 and 1885).

BANKS.
I . — T E R M S O F INCORPORATION.

State banks must not be organized with a less paid-up
capital t h a n $50,000, except t h a t in cities or towns of not
more t h a n 3,000 there m a y be banks with a paid-up
capital of not less t h a n $25,000 (1864). Shares m u s t be
of $100, issued only on full p a y m e n t of the sum represented by t h e m (1865).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

Every state b a n k is managed by a board of directors
of not less t h a n five, who must be shareholders, as follows:
In banks having a capital of $25,000 to $30,000, two
shares; in those having a capital of $30,000 to $40,000,
three shares; in those having a capital of $40,000 t o
$50,000, four shares; and in those having a capital of
$50,000 or over, five shares (1866).
IV.—RESERVE

REQUIREMENTS.

All state banks located in cities or towns of less t h a n
3,000 must maintain a reserve of not less t h a n 10 per cent




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Iowa

—

S a v i n g s

Banks

of their total deposits; all those located in cities and
towns of 3,000 or more must maintain a reserve of not
less t h a n 15 per cent. Three-fourths of t h e reserve m a y
be on deposit subject to call with other banks organized
under state or national laws (1867).
X.—UNAUTHORIZED BANKING.

Unless t h e provisions of t h e code are complied with, no
association m a y transact t h e business of banking, buying
and selling exchange, receiving deposits, and discounting
paper (1861). No unincorporated b a n k m a y embrace in
its n a m e t h e word " s t a t e " (1862), which is required t o
be p a r t of t h e name of banking corporations (1861).
SAVINGS B A N K S .
I . — T E R M S O F INCORPORATION.

Savings banks m a y do a commercial banking business
(i860).
The paid-up capital of every savings bank must be not
less t h a n $10,000 in cities, towns, or villages of 10,000 or
less, nor less t h a n $50,000 in cities having a greater population. The capital m u s t be paid in before business is
begun (1843). Shares m u s t be of $100 each, issued only
on full p a y m e n t of t h e sums represented by them. The
provision t h a t stock " o w n e d by any corporation" m a y
be transferred b y an agent of t h a t corporation indicates
t h a t corporations m a y be shareholders (1853).
T h e directors of any savings bank m a y set a p a r t from
its net earnings any desired sum as a surplus fund to be
kept separate from undivided profits. This surplus m a y
be transferred back to t h e undivided profits account and
used t o p a y expenses and dividends only when deposits
are less t h a n ten times t h e capital or capital and remaining surplus (1850a). Dividends m a y be declared only




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out of net profits, after expenses, including interest to
depositors, have been paid (1852).
II.—LIABILITIES AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

There must be not fewer than five nor more than nine
directors, at least three-fourths of them citizens of the
State. The stock required to be held to qualify as a
director is as follows: In a savings bank having a capital
of less than $20,000, one share; in one having a capital of
$20,000 to $30,000, two shares; in one having a capital
of $30,000 to $40,000, three shares; in one having a capital of $40,000 to $50,000, four shares; in one having a
capital of $50,000 or over, five shares (1845).
III.—SUPERVISION.
EXAMINATIONS.

The auditor may make a preliminary examination of
the affairs of a savings bank to satisfy himself that the
required capital has been paid in, etc. (1843).
IV.—RESERVE REQUIREMENTS.

Savings banks doing a commercial business located in
towns of less than 3,000 must keep a reserve equal to 15
per cent of their commercial deposits and 8 per cent of
their savings deposits. Savings banks located in cities
and towns of 3,000 or over must keep a reserve equal to
20 per cent of their commercial deposits and 8 per cent of
their savings deposits. Savings banks doing an exclusively savings bank business must keep an 8 per cent
reserve fund.. Three-fourths of the reserve may be on
deposit, subject to call, in other banks organized under
state or national laws (i860).




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V.—DISCOUNT, LOAN, AND DEPOSIT RESTRICTIONS.

For certain provisions regarding loans, forbidding loans
on the savings bank's own stock, etc., see VI, infra.
Every savings bank may receive on deposit money
equal to twenty times its paid-up capital and surplus; no
greater amount of deposits may be received unless the
paid-up capital and surplus are correspondingly increased.
When there are sufficient funds on hand to pay depositors,
the officers of a savings bank may waive the sixty days'
notice requirement. They may issue certificates of deposit payable on demand (1848). All accounts upon
which no deposit or draft has been made for ten years are
closed for purposes of interest, unless the deposit is an
endowment for children, a trust estate, or a deposit where
special provision has been made for a longer time (1849).
VI.—INVESTMENTS.

A savings bank may hold real estate only as follows:
The lot and building in which its business is carried on;
such real estate as has been purchased at sales on foreclosure of mortgages owned by the bank or on judgments
rendered for debts due the bank; such as has been conveyed to it in satisfaction of previous debts; and such as
it may obtain by redemption as junior mortgagee or judgment creditor. All apparently but the lot and building
first named must be sold within ten years (1851).
Every savings bank must invest its funds, capital, deposits, profits (and surplus—1850a), as follows: In United
States securities; in securities of Iowa; in bonds or warrants of municipalities of Iowa, but not exceeding 25 per
cent of the assets of the bank may be thus invested; in
notes or bonds secured by mortgage of unincumbered real
estate in Iowa worth twice the loan; in dealings in commercial paper, bills of exchange, or any other personal or
S. Doc. 353, 61-2




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public security, b u t a savings b a n k must not purchase,
hold, or loan upon shares of its own capital (1850).
X.—UNAUTHORIZED BANKING.

Any b a n k or person not incorporated under t h e provisions of t h e chapter on savings banks who advertises,
exhibits a sign, etc., as a savings bank, and any savings
b a n k advertising a greater a m o u n t of capital t h a n has
been paid in forfeit $100 a day while the offense is continued; it is also a misdemeanor for each day (1859).

TRUST COMPANIES.
Trust companies are referred to in the section requiring
reports to the assessors for taxation (1322), and in the
section forbidding examiners to examine institutions in a
county where they are interested in the banking or loan
and trust company business (1875, amd. b y 1909, chap.
115; and 1876). The most important trust company
provisions are in section 1889: Corporations are forbidden
to do banking except as authorized b y the banking laws,
except t h a t " l o a n and trust companies may receive time
deposits subject to the same limitations as are now or
m a y hereafter be prescribed for the receiving of deposits
by state banks and issue drafts on their depositaries." All
companies authorized to execute trusts or employing t h e
word " t r u s t " in their name m u s t have a paid-up capital
of not less t h a n t h a t required of savings banks and are
"subject to examination, regulation, and control of t h e
auditor of state like savings and state b a n k s . " Their
stockholders are liable to creditors in the terms of section
1882. (See supra for the provisions referred to.) Any
corporation violating section 1889 forfeits its charter, a n d
t h e corporation, its officers, directors, and agents are punished by fine of not less t h a n $500, imprisonment for not
less t h a n two years, or both.




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KANSAS.
So far as t h e general banking law of Kansas is concerned,
t h e digest is based upon t h e 1908 reprint b y the state banking department, which includes all legislation through
the special session of 1908. The general law is chapter
11a of t h e General Statutes of 1901, amended b y various
later laws; most of t h e citations in t h e digest are accordingly simply numbers in parenthesis, which refer t o sections
in the General Statutes of 1901, assuming all amendments
incorporated. So far as the trust company law is concerned, t h e digest is based upon t h e General Statutes of
1905, in which article 19 of chapter 23 is entitled " Trust
companies." References to t h a t act, therefore, are b y
numbers of sections in the General Statutes of 1905, indicating t h a t t h e section is in those statutes and not in
the statutes of 1901, b y prefixing 1905 to the number of
the section. The 1909 session laws have also been examined; an amendatory act, chapter 59 of 1909, a n d also
the b a n k depositors' guaranty law, chapter 61 of 1909,
appear in t h e digest. References to acts in the 1907 or
1909 session laws are prefixed by 1907 or 1909, as t h e case
m a y b e ; note, however, t h a t as explained above, references which are prefixed b y 1905 are not to the session
laws of t h a t year, b u t to the edition of General S t a t u t e s
then published. There is no special law dealing with




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savings banks. I t is a constitutional provision t h a t b a n k ing laws must be submitted to popular vote and approved
b y a majority (constitution, Art. X I I I , sec. 8).
BANKS.
I . — T E R M S OF INCORPORATION.

Apparently the business of savings banking and general
banking may be combined, for it is provided t h a t " a l l
savings banks or savings associations which do not transact a general banking business" must keep a certain reserve (418).
The capital in towns or cities of less t h a n 500 must be
not less t h a n $10,000; in towns of from 500 to 1,000, not
less t h a n $15,000; in all cities of t h e third class with a population of 1,000 and over, not less t h a n $20,000; in all cities
of t h e second class, not less t h a n $25,000; and in all cities
of t h e first class, not less t h a n $50,000 (408). (For classification of cities see 1905, chapter 17a.) Shares must be
of $100 each and all subscriptions paid in in cash (410).
A restriction on the a m o u n t of deposits allowed in proportion t o capital is given under V, infra.
Dividends m a y be declared out of net profits, b u t before
any dividend is declared one-tenth of the net profits since
t h e last dividend must be carried t o surplus fund until
it amounts t o 50 per cent of capital (438). No capital m a y
be withdrawn in dividends or otherwise (440).
Banks are forbidden to give preference to depositors or
creditors b y pledging t h e b a n k ' s assets as collateral, b u t
b a n k s m a y borrow for temporary purposes not more t h a n
50 per cent of t h e capital, pledging assets not t o exceed b y
more t h a n 20 per cent t h e amount borrowed. This
privilege must not be used habitually for t h e purpose of
reloaning, however (446).




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II.—LIABILITIES AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

Shareholders are liable additionally for a sum equal to
the par value of their stock (416).
There must be from five to thirteen directors, a majority
of whom must be residents of the county where the bank
is located or an adjoining county. Each must own at
least $500 of stock. They hold not less than four regular
meetings a year (415, amd. by 1909, chap. 59, 1). Directors who receive deposits knowing the bank is insolvent are
guilty of a felony (421) and are besides individually responsible for deposits so received, or debts created under
like circumstances (471). Bank officers who permit the
funds of the bank to be paid on check, order, or draft, the
drawer of which has not on deposit a sum equal to his draft
are personally liable to the bank for the amount paid
(445)III.—SUPERVISION.

The state official is the bank commissioner, who is appointed for four years; he and his deputies must have had
at least three years' practical knowledge of banking, or have
served one term as bank commissioner. No commissioner
or deputy may examine a bank in which he is financially
interested (427). The salary of the bank commissioner
is $2,500 a year (463).
The occasions in which the commissioner takes action
against banks are as follows: If reserves fall below the
required amount, he notifies the bank in question to make
good the reserve, and if it fails to do so for thirty days it is
deemed insolvent; the commissioner then takes possession
and proceeds against the bank for a receiver (418, amd. by
1909, chap. 59, 2). He orders excessive loans reduced
within sixty days (419). When it appears that the capital




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of a b a n k is impaired, t h e commissioner notifies t h e bank
to make the impairment good within ninety days (450).
If a b a n k refuses t o be examined, the commissioner revokes t h e bank's authority t o transact business and institutes receivership proceedings (454). When t h e bank
appears to be habitually borrowing for the purpose of
reloaning, t h e commissioner requires it to pay off its
debts (446). T h e commissioner proceeds against a b a n k
which refuses to comply with any requirement made upon
it for ninety days, t o forfeit its franchise and dissolve the
corporation (426). In general, in case of insolvency (defined in 437) shown by examination or report, and in case
of violation of law, t h e bank commissioner immediately
takes charge of the bank. H e m a y appoint a special
deputy to serve in this capacity, like a receiver, for a
period not longer t h a n ninety days. The commissioner
examines t h e b a n k ' s affairs thoroughly, and if satisfied t h a t
it can not resume business or liquidate its debts, he then
definitely appoints a receiver.
If t h e holders of more
t h a n 50 per cent of the claims against the bank agree upon
a person for receiver t h e commissioner must appoint him
(434). There are provisions for t h e enforcement of t h e
double stockholders' liability b y receivers (461, amd. by
1909, chap. 59, 7). Banks m a y voluntarily p u t themselves
in t h e commissioner's hands (435); he has, besides, supervision over voluntary liquidations (436). He approves
reductions of capital stock (449).
After a special examination required to be m a d e under
the guaranty fund act when a b a n k fails to pay its assessments, t h e bank commissioner, if he finds t h e b a n k insolvent, proceeds to liquidate it (1909, chap. 61, 5). If upon
examination a b a n k is found to be violating t h e depositors'
guaranty statute, t h e commissioner, after t h i r t y days'
notice t o t h e b a n k t o comply with t h e s t a t u t e , m a y cancel




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its membership in the fund, and seize for t h e fund the
deposited bonds. See X I I , infra (1909, chap. 61, 11).
If t h e bank commissioner finds any officer of a bank
dishonest, reckless, or incompetent, he orders t h e directors
of t h e b a n k to remove t h e officer; failure t o comply with
his order cancels t h e bank's authority t o transact business
till it is complied with (1909, chap. 59, 4).
The commissioner has certain discretion with respect
to reserve depositaries. See IV, infra,
REPORTS.

A preliminary report containing names and residences
of stockholders is transmitted t o t h e b a n k commissioner
before business is begun (411). Regular reports m u s t be
made at least four times a year and oftener if called for
by the b a n k commissioner, according to the form he prescribes, exhibiting resources and liabilities at t h e close of
business on a past day specified b y the commissioner.
They must be transmitted to t h e commissioner within ten
days after receipt of his request, and must be published in
a local newspaper (423 and 432). In addition t o these
reports every bank must within ten days after declaring
a dividend forward to the commissioner a statement of
t h e amount of t h e dividend and the amount carried
to surplus. Also within ten days after J a n u a r y 1 of
each year a report of receipts and disbursements for the
preceding year must be forwarded to the commissioner
(424). After each examination made b y the directors at
their quarterly meetings a report of the result is forwarded
as a record of the meeting to the commissioner (415, amd.
by 1909, chap. 59, 1). Once a year a list of shareholders,
their addresses, and amounts held is sent to the commissioner (453). Receivers make and publish reports as
banks do (459).




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For special reports required to be made b y banks guaranteed under t h e depositors' g u a r a n t y fund s t a t u t e , see
X I I , infra (1909, chap. 61, 7).
Every other year t h e commissioner reports to t h e
governor, stating t h e name, location, and officers of each
bank, number and dates of examinations and reports,
and whatever other information t h e commissioner thinks
proper (462).
(For reports required for purposes of taxation, see 1905,
8276.)
EXAMINATIONS.

A preliminary examination is m a d e by t h e commissioner
before business is begun with a view particularly t o
ascertaining t h e amount of capital paid and compliance
with preliminaries (411 and 422). The regular examinations are m a d e semiannually, or oftener if necessary, b y
the commissioner or a subordinate, who fully investigates
t h e condition of the bank (429). Banks in t h e hands of
receivers are examined in t h e same way (459). The
commissioner makes an examination of banks in voluntary
dissolution (414 and 436). H e examines thoroughly
insolvent b a n k s against which receivership proceedings
are being brought (434).
Before a b a n k is allowed to become a guaranteed b a n k
(see X I I , infra) it must be rigidly examined by t h e b a n k
commissioner (1909, chap. 61, 1). A special examination
is immediately m a d e when a b a n k fails to pay its assessments to the depositors' guaranty fund (1909, chap. 61, 5).
Directors at their regular meetings, which are a t least
quarterly, make a thorough examination of t h e affairs
of t h e bank (415, amd. by 1909, chap. 59, 1).




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IV.—RESERVE REQUIREMENTS.

Banks in cities or towns of less t h a n 5,000 m u s t keep
a reserve in available funds equal to 20 per cent of their
entire deposits, and banks in cities over 5,000, 25 per cent
of their entire deposits, three-fourths of which m a y consist
of balances due from good solvent banks, provided the
depositor b a n k has no stockholders who are also stockholders in t h e depository, unless t h e b a n k commissioner
waives this prohibition in t h e particular case, and provided
t h e depositories are banks located a t commercial centers
or other places approved b y t h e commissioner; t h e other
one-fourth m u s t be in cash. A b a n k which is a depositary for reserves of other banks m u s t keep a reserve of 25
per cent always. Cash items must not be considered p a r t
of reserves. When t h e reserve falls below, no new liabilities m a y be incurred except discount or purchase of
sight exchange and no dividends m a y be declared. The
commissioner notifies banks whose reserves are below the
requirement, to make the deficiency good. The commissioner m a y refuse to consider as p a r t of a bank's reserve
balances due from other banks which neglect to furnish
him with required information (418, amd. by 1909, chap.
59, 2).
V . — D I S C O U N T , L O A N , AND D E P O S I T R E S T R I C T I O N S .

The total liability to any b a n k of a person, firm, or
corporation for money borrowed, including in firm or
corporation liabilities those of t h e members, m u s t not
exceed 15 per cent of the capital and surplus, b u t discount
of bills of exchange drawn against existing values and of
commercial paper under most circumstances is not considered as money borrowed (419).
No b a n k m a y loan on t h e security of shares of its own
stock, unless t h e security is necessary to prevent loss on




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a previous debt, in which case t h e stock must be disposed
of within six months (417).
No bank m a y accept deposits continuously for six
months in excess of ten times its paid u p capital and surplus. The violation of this section for thirty days cancels
t h e bank's authority to transact business until t h e section
is complied with (1909, chap. 59, 5). A bank guaranteed
under the depositors' guaranty fund s t a t u t e loses its
membership in the fund if its deposits exceed this proportion, and forfeits its deposited securities (1909, chap. 61,
14). See X I I , infra.
(For restrictions on banks' power to borrow, see I,
supra.)
VI.—INVESTMENTS.

Only such real estate may be held as is necessary for the
convenient transaction of the bank's business (this m u s t
not exceed one-third of the paid in capital), such as is conveyed to t h e b a n k in satisfaction of previous debts, and
such as the bank purchases under judgments or foreclosures
on liens held by t h e bank (and the bank must never bid
a larger a m o u n t t h a n t h a t necessary to satisfy the debt
and costs). All real estate, except t h a t held for t h e
accommodation of the bank in its business, must be disposed of within five years and thirty days (456). In t h e
enumeration of powers of banks it is provided t h a t t h e y
m a y buy and sell United States bonds, Kansas bonds, and
bonds of Kansas municipalities (407).
No bank m a y engage in commerce, etc., nor invest in
the stock of any other bank or corporation, nor purchase
its own stock unless t h a t purchase is necessary to prevent
loss upon a previous debt, in which case the stock must be
disposed of within six months. Nevertheless, a bank m a y
hold and sell all sorts of property which it acquires as
collateral for loans or in the ordinary collection of debts,




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b u t such goods m u s t be disposed of as soon as possible
and are not considered as assets for more t h a n six months
after they are acquired (417).
VII.—OVERDRAFTS.

These are not expressly forbidden, b u t it is provided
t h a t any officer who pays out the funds of the bank upon
a check, order, or draft of one who has not on deposit a
sum equal to the draft is personally liable to t h e b a n k for
the amount paid (445).
X.—UNAUTHORIZED BANKING.

I t is unlawful for any individual, firm, or corporation
to do a banking business or receive deposits without having received a certificate from t h e bank commissioner.
Doing business without this certificate, whether individually or as an interested p a r t y in a firm or corporation,
is a misdemeanor, punishable b y fine of from $300 to
$1,000, or by imprisonment of from thirty days to one
year, or b y both (422). Doing business after authority
has been revoked is similarly punishable (455). Individuals, firms, or corporations who advertise themselves
to be engaged in a banking business without having first
obtained authority from the bank commissioner are
guilty of a misdemeanor, punishable by fine not to exceed
$1,000, imprisonment not to exceed one year, or both
(468 and 441). Private bankers must have t h e capital
required of incorporated banks; they must not use t h e
word " S t a t e " as p a r t of their name, and in all published
advertisements, etc., they must use the words " p r i v a t e
b a n k " (452).
XI.—PENALTIES.

False reports or entries in books are punished by a fine
of not over $1,000, or imprisonment of from one to five




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years (420). Receipt of deposits while t h e b a n k is insolvent is a felony b y the officer who does so, punishable b y
a fine of not over $5,000, imprisonment of from one t o
five years, or both (421). Failure to report entails a
penalty on the bank of $50 per day (425). Receivers of
banks who fail to report or permit themselves to be
examined are subject t o the same penalty t h a t banks are
(459). Failure to comply with a requirement made b y
t h e bank commissioner for ninety days entails forfeiture
of t h e bank's franchise (426). The bank officer or employee who certifies a check when the drawer has not t h e
required funds in t h e bank is guilty of a misdemeanor,
punishable by t h e general penalty given below (443).
Refusal to submit the affairs of a bank for examination
m a y entail revocation of authority to do business (454).
The commissioner or a subordinate of his who neglects his
duty, permits a violation of the s t a t u t e for ninety days,
makes false statements, etc., loses his office, and is punished by t h e general penalty given below (464, amd. b y
1909, chap. 59, 3). The general penalty for bankers,
officers of banks, directors, or employees who violate t h e
banking statutes is a fine of not over $1,000, imprisonment
of not over one year, or both (441).
Every officer, agent, etc., of a bank who embezzles,
issues a certificate of deposit, draws a draft, etc., with
intent to defraud anyone, or to deceive an officer of the
bank or an examining official, and anyone aiding in such an
offense, is guilty of a felony, punishable b y imprisonment
for from one t o fifteen years (444, amd. by 1909, chap.
59, 6).
For penalties with respect to the guaranty fund system see X I I infra.
Assessments are increased by penalties in case they are not paid on time; various fines and
imprisonments result from a bank's improperly advertising itself (1909, chap. 61, 5, 7, etc.).




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XII.—DEPOSITORS' GUARANTY SYSTEM.

Any state bank in Kansas having a paid up and unimpaired surplus equal to 10 per cent of its capital m a y participate in the assessments and benefits of t h e bank depositors' guaranty fund of t h e State of Kansas. The
b a n k examiner when notified t h a t the directors have resolved to participate in the system makes a rigid examination of the bank, and if it is found to be solvent, properly managed, and conducted in strict accordance with t h e
law the commissioner, after t h e bank has m a d e the required deposit, issues a certificate stating t h a t its deposits
are guaranteed (1909, chap. 61, 1). Before receiving this
certificate each bank, as an evidence of good faith, must
deposit, and it must at all times maintain a deposit, of
cash, or of United States bonds, Kansas bonds, or bonds
of Kansas municipalities, to the a m o u n t of $500 for every
$100,000, or fraction, of average deposits eligible to guara n t y (less its capital and surplus) as shown by its last
four statements; provided, however, t h a t each b a n k must
deposit not less t h a n $500. These bonds, or cash in lieu
of them, m u s t not be charged out of the assets of t h e bank,
b u t must be carried in its assets as " g u a r a n t y fund with
state t r e a s u r e r " until such a time as the bank shall default in p a y m e n t of assessments. In addition to this deposit every bank must pay in cash an a m o u n t equal to
one-twentieth of 1 per cent of average deposits eligible to
guaranty (less its capital and surplus), and these assessments must be credited to t h e bank depositors' g u a r a n t y
fund with t h e state treasurer, subject to the order of t h e
bank commissioner. The minimum assessment required
from any b a n k is $20. Any bank seeking to participate
in t h e system after t h e first annual payment, t h a t of 1910,
is assessed an a m o u n t approximately equal to its proportionate share of t h e money then in t h e fund, t h e a m o u n t




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of t h e assessment to be determined by t h e commissioner
(1909, chap. 61, 2 and 10).
The bank commissioner during J a n u a r y of each year
makes assessments of one-twentieth of 1 per cent of the
average guaranteed deposits, less capital and surplus, of
each bank (the minimum assessment to be $20) until t h e
cash fund is approximately equal to $500,000 above whatever cash m a y have been deposited in lieu of bonds.
W h e n t h e fund has reached this point t h e commissioner
discontinues assessments. If the fund becomes depleted,
t h e commissioner levies such additional assessments as are
necessary to maintain it, provided t h a t not more t h a n
five assessments of one-twentieth of 1 per cent m a y be
made in one year. The treasurer holds the fund in state
depository banks, subject to t h e order of the b a n k commissioner, and credits it quarterly with interest (1909,
chap. 61, 3).
When any bank is found t o be insolvent b y the bank
commissioner and he is proceeding t o wind up its affairs
(see Banks, I I I , supra), he issues at t h e earliest possible
moment to each depositor a certificate bearing interest at
6 per cent, except where a contract rate exists on t h e deposit, in which case t h e certificate bears interest a t the
contract rate. After t h e officer in charge of t h e bank
has realized upon t h e assets of the bank and exhausted
t h e double liability of its stockholders and has paid all the
funds so collected in dividends t o depositors, he t h e n certifies all balances due on guaranteed deposits, if any such
balances exist, to t h e b a n k commissioner, who draws upon
t h e depositors' guaranty fund, a check in favor of each
depositor for t h e balance due him. If the available funds
in the guaranty fund are not sufficient to pay all guaranteed deposits of a failed b a n k and t h e five assessments
have been made, t h e commissioner pays to t h e depositors
pro r a t a t h e funds in his hands, and pays t h e remainder




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due them when t h e next assessment becomes available.
W h e n the commissioner has paid any dividend to depositors out of t h e fund, t h e claims of t h e depositors so paid
revert to the commissioner for the benefit of the fund
until it has been reimbursed for its payments with interest
at 3 per cent (1909, chap. 61, 4).
A penalty of 50 per cent of the a m o u n t of an assessment
is added to it when a bank does not remit within t h i r t y
days after receipt of notice, and if a bank after t h a t
notice fails to remit an assessment a sufficient a m o u n t of
its bonds are sold by the commissioner to pay the assessment. The remainder of the bonds, or cash deposited in
lieu of them, are forfeited to the guaranty fund if the
bank does not within sixty days from the default in payment of the assessment remit the full amount of assessment and penalty to date and restore its pledge of bonds
or money. On the bank's failure to remit its assessments
the commissioner examines it, and if he judges it insolvent proceeds to liquidate it. If it is found to be solvent,
he cancels its certificate as a guaranteed bank and posts
a notice t h a t it has withdrawn from the guaranty fund
system. Banks may voluntarily withdraw from the system, in which case they receive their pledged bonds when
the affairs of all failed banks in liquidation at the end of
six months after the bank has elected to withdraw have
been closed up and the bank has paid its assessments on
account of these failures (1909, chap. 61, 5).
Only deposits which do not bear interest and t h e following deposits are guaranteed under the s t a t u t e : time
certificates payable in from six months to one year, bearing interest at not more t h a n 3 per cent, on which interest
ceases at m a t u r i t y ; savings accounts, not over $100 to
any one person, not subject to check, requiring sixty
days' notice of withdrawal, and bearing interest a t n o t




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more t h a n 3 per cent. Deposits which are primarily rediscounts or money borrowed by t h e bank and all deposits
otherwise secured m a y not be guaranteed. Deposits not
eligible t o guaranty are excluded in computing its assessments (1909, chap. 61, 6).
Each bank guaranteed under the s t a t u t e keeps a record
of t h e interest paid to each depositor and makes a quarterly statement of this record t o t h e commissioner. If a
b a n k advertises t h a t its depositors are guaranteed, then
if it pays or agrees t o pay interest at a greater rate t h a n
3 per cent on any deposits it must state on t h e advertisement t h a t no deposits are guaranteed which bear a
greater rate of interest t h a n 3 per cent. No bank which
pays interest a t a greater rate t h a n 3 per cent on any
deposit, or pays interest on short-time savings deposits,
or on time certificates cashed before maturity, may participate in the system. Any managing officer of a guaranteed bank, or any person acting for t h e bank who promises to pay a depositor interest at a higher rate t h a n t h a t
allowed by the s t a t u t e , or who pledges time certificates
or other obligations of the bank as security for his or
another's personal obligation, in order to avoid the provisions of the statute, is guilty of misdemeanor, punishable by fine of $500 to $5,000, imprisonment not exceeding
one year, or both. Advertising in such a way as to imply
t h a t deposits are guaranteed b y the State of Kansas is a
misdemeanor punishable by fine of $500, and advertising
so as to imply t h a t deposits are guaranteed by t h e system
when the advertising b a n k is not so authorized t o do is
a misdemeanor punishable by fine of $500 to $1,000 (1909,
chap. 61, 7).
Any trust company m a y reorganize as a state b a n k so
as t o come within the provisions of the depositors' guara n t y fund system, and private banks or national b a n k s
properly qualified m a y also reorganize as state banks




192

Kansas

— Savings

Banks

(1909, chap. 61, 8). Any national bank in Kansas, after
an examination resulting in t h e approval of the bank
commissioner, m a y participate in t h e system on t h e same
terms as state banks, provided it forwards to the commissioner detailed reports of its condition on the dates
when they are required of state banks (which reports it
need not publish, however), and provided it submits to
one examination a year by the commissioner, or more a t
his discretion (1909, chap. 61, 13).
No guaranteed bank m a y receive deposits continuously
for six months in excess of ten times its paid-up capital
and surplus; violation of this provision cancels all rights
to participate in t h e benefits of the fund and forfeits t h e
deposited bonds (1909, chap. 61, 14). Another s t a t u t e
provides t h a t if a b a n k exceeds this deposit limit for
thirty days over the continuous six months, its authority
to transact business is revoked till the excess of deposits
is reduced (1909, chap. 59, 5). If upon examination a
guaranteed bank is found to be violating the s t a t u t e , the
commissioner notifies it t h a t it has thirty days in which
to comply with the provisions of the s t a t u t e ; if it fails to
do so, it forfeits its membership in the guaranty fund, and
its bonds deposited belong t o the fund (1909, chap. 61, 11).
SAVINGS BANKS.
The only special provision for savings banks is t h a t
those which do not transact a general banking business
must keep on hand a t all times in actual cash a sum equal
to 10 per cent of their deposits, and keep a like sum invested in good bonds of the United States, or state or
municipal bonds of Kansas worth not less t h a n p a r (418).

S. Doc. 353, 61-2




13

1 g3

National

M o n et ar y

Commission

TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

Trust companies do a general banking business (1907,
p. 629).
The capital must be not less t h a n $100,000 nor more
t h a n $1,000,000, divided into $100 shares. Twenty per
cent must be paid in before t h e company begins business,
and t h e entire capital fully paid within six m o n t h s (1905,
1529)Dividends m a y be declared not in excess of net profits,
if a sum equal t o 10 per cent of t h e earnings during t h e
last dividend period has been carried to a surplus account;
this last must be done until t h e surplus equals one-half
t h e capital. When the surplus is used in charging off
losses, no dividend m a y be declared in excess of 50 per
cent of net earnings until t h e surplus is restored, the other
50 per cent being, at each dividend time, used to replenish
surplus (1905, 1535).
I I . — L I A B I L I T I E S AND D U T I E S O F STOCKHOLDERS AND
DIRECTORS.

Dues from corporations are secured by individual liability of t h e stockholders to an additional a m o u n t equal
t o t h e stock owned by each stockholder (constitution,
Art. X I I , sec. 2).
There must be from five t o fifteen directors, a majority
of t h e m residents of Kansas, and each a stockholder to an
a m o u n t not less t h a n $1,000 (1905, 1533). They must
hold a t least four regular meetings a year, making a
thorough examination of t h e affairs of the company a t
each meeting (1905, 1534). If they pay an illegal dividend,
they are liable t o the company or t o creditors for t h a t
a m o u n t (1905, 1535)-




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Kansas

—

Trust

Companies

III.—SUPERVISION.

Trust companies are under t h e supervision of t h e
b a n k commissioner. The provisions of the banking law
relating to impairment of capital, insolvency, and t h e
d u t y of the bank commissioner in such cases, apply also to
trust companies. They make four R E P O R T S like banks,
and are subject to t h e same sort of E X A M I N A T I O N S
(1905, 1538 and 1540). The directors at their quarterly
meeting examine t h e affairs of the company (1905, 1534).
IV.—RESERVE

REQUIREMENTS.

Trust companies t h a t receive deposits must keep a sum
equal to 25 per cent of the deposits t h a t are subject t o
check, and 10 per cent of the time deposits, " i n t h e same
manner and subject t o the same rules as is provided for
state b a n k s , " b u t United States bonds, and demand loans,
secured b y United States, state, or municipal bonds of t h e
cash value of the loans, may be accepted as p a r t of t h e
reserve in lieu of deposits in banks (1905, 1528).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

A trust company may loan on " r e a l estate, chattel,
collateral, or personal security/' b u t no trust company
m a y loan on its own stock. T h e latter restriction seems
not even subject t o the exception of necessity t o secure
an old debt, for t h e exception is phrased to include
" p u r c h a s e , " b u t not taking as security. (1907, p . 628.)
VI.—INVESTMENTS .

Trust companies may own buildings suitable for t h e
conduct of their business and may hold real estate acquired
in t h e collection of debts, b u t the real estate so owned
must not exceed 50 per cent of the capital of t h e company
for a longer period t h a n six months (1905, 1537).




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Mon

etary

Commission

A trust company may buy and sell all kinds of government, municipal, and corporation bonds, and ''all kinds
of negotiable and non-negotiable paper, securities, and
stocks;" but the total investment of any trust company
in bank stock must not exceed one-fourth of its paid up
capital, and no trust company may purchase its own
stock unless necessary to prevent loss on a previous debt,
in which case the stock must be disposed of within six
months. (1907, p. 628.)
X.—UNAUTHORIZED TRUST COMPANY BUSINESS.

The name of every trust company must end with the
words "trust company" (1905, 1532). No corporation
not organized under the Kansas law relating to trust
companies may use the word " t r u s t " as part of its name.
Illegal use of the word is a misdemeanor, entailing a fine
of not less than $300 nor more than $1,000, or imprisonment for not less than thirty days nor more than one year,
or both; each day during which the word is used being a
separate offense. (1907, p. 629.)
XI.—PENALTIES.

All the penalties provided in the banking law for failure
to report or permit examinations or to comply with
requirements of the bank commissioner, penalties for
frauds, etc., and those for receiving deposits when insolvent, apply to trust companies, their officers, directors,
and employees (1905, 1539).




196

KENTUCKY.
In the revisal of the Kentucky statutes issued in 1903,
chapter 32 deals with ''Corporations—private." Of this
chapter Article II is entitled "Banks and banking" and
is divided into two subdivisions, "Incorporated banks"
and "Private bankers," of which the latter was repealed
in 1906. Article III of chapter 32 treats of "Trust companies;" and Article VII, of " Building and loan associations." Since this arrangement groups banks and savings
banks together, the digest discusses them under one head,
treating trust companies separately. It must be noted,
however, that under 612a, the second and third clauses of
which seem still to be in effect, trust companies, in so far
as they do a banking business, are subject to the laws
applicable to banks. Numbers in parenthesis refer to
sections in the Kentucky statutes of 1903, and later
legislation is referred to by chapters of the session laws,
which have been examined through 1908.
BANKS AND SAVINGS BANKS.
I.—TERMS OF INCORPORATION.

Any number of persons, not less than five, may establish
a commercial bank, or a savings bank, or a bank with departments for both classes of business (577). A bank
combining the business of a commercial and savings bank
must keep separate books for each kind of business (590).




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Monetary

Commission

The capital stock of any bank m u s t be at least $15,000,
and in cities having a population of fifty thousand or
more, a t least $100,000 (577). At least 50 per cent of
the capital m u s t be paid in in money before business is
begun. The remainder must be paid in in money within
a year (580).
To combine t h e business of a b a n k and a t r u s t company,
n o t less t h a n seven persons m a y associate with a capital
stock of not less t h a n $50,000 all paid in in money before
t h e corporation begins business, except t h a t if t h e capital
equals or exceeds $100,000, t h e n only one-half of it need
be paid in before business is begun, and the rest m u s t be
paid in within twelve months. One-half of t h e capital
stock m u s t be securely invested for t h e trust business and
k e p t separate; this is primarily liable for t r u s t obligations. The rest of the capital m a y be used in banking
business. The books m u s t always show this separation
(1906, chap. 146). The statutes governing banks apply to
t h e banking d e p a r t m e n t of such a corporation, and those
governing trust companies apply to t h e t r u s t company
d e p a r t m e n t (612a), unless the second and third clauses of
612a were repealed by chapter 146 of 1906, which seems
unlikely.
Dividends m a y be declared out of net profits, b u t before
declaring any dividend not less t h a n one-tenth of t h e net
profits for the preceding dividend period must be carried
to a surplus fund until the surplus amounts to 20 per cent
of t h e capital stock (596).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS AND

DIRECTORS.

Stockholders are liable for all contracts and liabilities
of their bank to t h e extent of the a m o u n t of their stock a t
par, in addition to the a m o u n t of the stock (595). No per-




198

Kentucky

— State

Banks,

etc.

son m a y hold more t h a n one-half the capital stock of a
bank exclusive of stock held as collateral (581).
Directors or other officers of any b a n k who receive
deposits with knowledge t h a t the bank is insolvent are
individually responsible for t h e deposits (597). Directors
who knowingly violate or permit their bank to violate any
provisions of t h e statutes are liable to creditors and stockholders for any loss resulting from t h e violation (598).
III.—SUPERVISION.

There appears to be no officer of the State charged with
the d u t y of supervising banks alone. I t is the secretary
of state who performs t h e functions of a b a n k supervisor.
If the reserve of any b a n k falls below the required amount,
t h e secretary of state notifies t h e b a n k to m a k e the reserve good, and if it fails to do so for thirty days t h e secretary of state, with the consent of the attorney-general,
institutes proceedings for a receivership (585). If the
capital stock of a bank becomes impaired, the secretary of
state notifies the bank to make it good, and if the bank
fails to do so for thirty days the secretary of state m a y
institute proceedings necessary to wind up t h e affairs
of the bank (580 and 586). In general, the secretary of
state, when satisfied t h a t any b a n k or corporation is
insolvent or t h a t its capital is impaired, or t h a t it has
violated any of the provisions of the law under which it
was organized, may, with the approval of the attorneygeneral, apply t o the court for the appointment of a
receiver (616); and in case directors who violate t h e law
fail to make good within a reasonable time whatever
loss their violation occasions, t h e secretary of state
institutes proceedings for forfeiture of the bank's charter
(598). The secretary of state has authority to pass upon
proposed reductions in the capital stock of any b a n k (587).




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Monetary

Commission

REPORTS.

Once in every three months, and oftener if required,
each b a n k reports its condition t o t h e secretary of state
a t such times and according to such forms as he prescribes.
E a c h alternate report is published in t h e county newspaper having t h e largest circulation (593). I n J a n u a r y
of each year t h e directors of every b a n k file with t h e
secretary of state a list of stockholders and officers (595).
Twice in each J a n u a r y every b a n k publishes a statem e n t of deposits, dividends, and interest which have been
unclaimed b y t h e person to whom they are due for five
years (592).
(For reports due from state depositaries, see 4691 a n d
1906, chap. 5; for reports required for purposes of t a x a tion, see 4092, etc., and 1906, p . 134.)
IV.—RESERVE

REQUIREMENTS.

Banks m u s t keep on hand a t least 15 per cent of their
total deposits, and in cities with a population of 50,000
a t least 25 per cent. One-third of this reserve m u s t be
in money, and t h e balance m a y be in demand deposits
in other banks. No bank, however, is required t o keep
on h a n d more t h a n 10 per cent of savings deposits—that
is, deposits on which the depositor has not the right t o
check except upon giving at least t h i r t y days' notice (1906,
chap. 155).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

No bank m a y permit any of its stockholders or a n y
person, company, or firm, including in company or firm
liabilities those of t h e individual members, to become
indebted to the b a n k in an a m o u n t exceeding 20 per cent
of its capital a n d surplus, unless the borrower pledges
good collateral security, or executes a mortgage which is




200

Kentucky

— State

Banks,

etc.

of more t h a n t h e cash value of the loan above all other
incumbrances. If the borrower is a director or officer
his indebtedness m u s t not exceed 10 per cent of the
capital of the bank, unless he pledges property worth
double the a m o u n t of the excess. I n no case m a y t h e
indebtedness of a person, company, or firm, including in
company or firm liabilities those of t h e members, exceed
30 per cent of capital and surplus (583). There must be
no privileges given stockholders in making loans over
persons not stockholders (581).
No b a n k is allowed to take as security its own stock
(581).
VI.—INVESTMENTS.

Banks m a y hold such real estate as m a y be necessary
for the transaction of their business; and, for a period
not longer t h a n five years, such other real estate as is
received in satisfaction of previous debts, or such as is
purchased under a judgment in favor of the purchasing
b a n k (582).
No bank m a y hold any of its own capital stock unless
the purchase is necessary to prevent loss on previous
debt. Stock so purchased must not be held for a longer
time t h a n one year (581).
X.—UNAUTHORIZED BANKING.

Individuals and partnerships m a y not engage in banking; violation of this rule is a misdemeanor, for which
the penalty is from $20 to $50 a day while the illegal
business is conducted (1906, chap. 44).
XI.—PENALTIES.

Any bank which fails to make reports within five days
after they are due, or which fails to publish them, forfeits
$200 (594). Officers of banks who receive deposits with




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Monetary

Commission

knowledge of t h e bank's insolvency (and t h e same rule
prevails in the case of individual bankers) are guilty of a
felony, for which t h e punishment is from one to ten years'
imprisonment (597). If directors of a b a n k allow a violation of law and t h e damage occasioned is not made good
within a reasonable time, t h e secretary of state institutes
proceedings for forfeiture of the bank's charter (598).
T R U S T COMPANIES.
I . — T E R M S O F INCORPORATION.

Any number of persons, not less t h a n seven, m a y
incorporate a trust company with a capital of not less
t h a n $15,000 in counties having a population of over
25,000 and under 40,000; with a capital of not less
t h a n $100,000 in counties of over 40,000 and less t h a n
100,000; and with a capital of not less t h a n $200,000 in
counties of over 100,000. I n counties of 25,000 or more,
however, where there are cities belonging to certain
classes (see statutory classification in 2740), a trust comp a n y m a y be organized in one of those cities with a capital
of not less t h a n $25,000 (1904, chap. 78). At least 50
per cent of t h e capital stock must be paid in in money
before t h e trust company begins business. The remainder
m u s t be paid in in money within a year (607).
For the combination of trust company and banking
business see I, under Banks and savings banks. Trust
companies are forbidden to engage in banking* business
except under the provisions of chapter 146 of 1906, and
612a, for the combination of banking and trust company
business (612).
I I . — L I A B I L I T I E S AND D U T I E S O F STOCKHOLDERS.

The stockholders of trust companies are liable for all
contracts and liabilities of their corporation t o an a m o u n t
equal t o their stock at par in addition t o t h e amount of




202

Kentucky

— Trust

Companies

the stock (613). No person m a y hold more t h a n onehalf t h e stock of any trust company, exclusive of stock
held as collateral (609).
Ill.—SUPERVISION.

The secretary of state has authority, with the advice and
consent of t h e attorney-general, to withhold the certificate
allowing t h e company to begin business if he thinks it
has been formed for an illegitimate purpose (608).
On becoming satisfied t h a t a trust company has become
insolvent or t h a t its capital is impaired, or t h a t it has
violated the law, he m a y apply for t h e appointment of a
receiver (607 and 616).
REPORTS.

Trust companies report their condition as often and
on the same dates and in the same manner as banks do
(615). A list of the stockholders and officers must be
filed with the secretary of state in J a n u a r y of each year
(613). (For reports for purposes of taxation see 4092,
etc., and 1906, p. 134.)
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

No stockholder or any person, company, or firm,
including in company or firm liabilities those of the
members, m a y be indebted to a trust company in a sum
exceeding 10 per cent of its capital and surplus, unless
the borrower deposits good collateral security, or executes
a mortgage worth more t h a n t h e cash value of the loan
above all other incumbrances. If the borrower is a
director or officer he must not become indebted in excess
of 10 per cent of the capital stock without pledging
property worth double the excess. In no event m a y the
indebtedness of one person, company, or firm, including
in company or firm liabilities those of the members,




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Monetary

Commission

exceed 20 per cent of capital and surplus (610). The
same security is required of stockholders as of persons not
stockholders (609).
Trust companies are not allowed to take their own
stock as security (609).
VI.—INVESTMENTS .

Trust companies m a y acquire land only for t h e transaction of their business, and, for a period not longer t h a n
five years, such other land as m a y be conveyed t o them
in satisfaction of previous debts, or such as m a y be purchased under a judgment in favor of the company; this
does not prevent trust companies from holding land in
trust, however (612).
Trust companies m a y not hold their own stock, unless
the purchase is necessary to prevent loss upon a previous
debt, and in t h a t case the stock must be disposed of at
t h e end of a year (609).
The capital of trust companies doing a banking business
m u s t be invested by halves, one-half for the trust-company
business and the other for the banking business (1906,
ch. 146).
XI.—PENALTIES.

Failure to make or publish reports entails t h e same
penalty t h a t is imposed upon banks for a like offense
(615); and in general trust companies are subject, when
engaged in the banking business, to all the provisions of
law regarding banks (612a).




204

LOUISIANA.
The s t a t u t e law of this State on banking is in a very confused condition because so m a n y recent statutes, instead of repealing former statutes specifically, have only
repealed such laws or parts of laws as are consistent with
t h e recent enactments. The revision of 1904 recognizes
this difficulty, and so does the reprint of banking statutes
on which this digest is based—a compilation, including
all legislation through the session of 1908, prepared by
L. E. Thomas, formerly state examiner of state banks.
Mr. Thomas calls act No. 179 of 1902, as amended b y act
No. 140 of 1906, the general banking act, and act No. 45 of
1902 t h e trust company act. This, however, by no means
makes it clear to which classes of business each of these
two statutes applies, for No. 179 is framed to cover " banking associations and savings banks " and No. 45 to cover
" b a n k s " organized "for t h e purpose of conducting a savings, safe-deposit, and trust banking business in any of its
branches." Owing to the difficulty occasioned by this
phraseology in determining to which of our three classes, viz,
banks, savings banks, or trust companies, the various provisions apply, t h e digest is not arranged according to those
three classes, b u t in stating each provision tries to point its
application merely by using the language of t h e clause on
.which it is based. The m a t t e r is further complicated because section 32 of 179 provides t h a t in case of conflict with




205

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Monetary

Commission

45, 45 is to control so far as concerns savings, safe-deposit,
and t r u s t b a n k s ; whereas section 7 of 45 provides t h a t banks
organized under t h a t law shall, except as provided in it,
have t h e powers and be subject to t h e regulations of banks
organized under t h e general banking laws. All pertinent
provisions of acts Nos. 45 and 179 of 1902 are here presented,
citing those acts simply as " 45 " and " 179 ", with sections.
Other acts are inserted which seem clearly not repealed;
they are cited either by year and number, or, where the
abbreviation R. S. is'used, by sections in t h e revised laws
of Louisiana, 1904.
I . — T E R M S OF INCORPORATION.

The regular a m o u n t of capital prescribed for banking
associations and savings banks is $100,000 (179, sec. 28).
Outside any incorporated town of 250 or more inhabitants,
however, the corporation need have a cash capital of only
$10,000 (179, sec. 2). There are t h e following rules for
smaller capital, also: Banking associations other t h a n
savings banks m a y be organized in incorporated towns
of less t h a n 2,500 with a capital of $10,000; in incorporated
cities or towns of from 2,500 to 10,000, with $30,000; and
in those between 10,000 and 20,000, with $50,000. Also
savings banks m a y be established in towns of not more
t h a n 15,000 with a capital of $30,000; and in towns from
15,000 to 30,000, with $50,000 (179, sec. 28).
Banks organized under the act relating to savings, safedeposit, and t r u s t banking business must have a cash paidin capital of at least $100,000 (45, sec. 6). I t has been
enacted, however, t h a t savings and safe-deposit b a n k s
m a y be organized with a cash capital of not less t h a n
$30,000 in incorporated towns of not more t h a n 20,000
(R. S. 277, as amended by 189 of 1902).




206

Louisiana

— General

Provisions

Banking associations and savings banks must not begin
business until one-half of the subscribed capital has been
paid in in cash. The remainder must be paid u p within
ninety days after the business has been begun (179, sec. 8).
The directors of every banking association and savings
bank must set aside one-tenth of the annual profits, until
this surplus equals 20 per cent of the capital; no dividends may be paid unless they have been earned within
the preceding dividend period, and in case there are debts
on which payments of principal or interest have been
overdue for twelve months, no dividends m a y be declared
till the debts in question have been charged off or reduced
in value after an appraisement by t h e state b a n k examiner
and two stockholders of the b a n k (179, sec. 30, and see
also act 65 of 1900).
Banks m a y apparently combine general banking, savings bank, and trust company business (45, sec. 5).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

The liability of a shareholder in any banking association
or savings bank is limited to t h e unpaid portion of the
original purchase price of his stock (179, sec. 10).
There must be not fewer t h a n seven nor more t h a n
fifteen (though note t h a t under 45 the number of directors m a y be whatever the articles of incorporation prescribe) directors of a banking association or savings b a n k ;
a t least three-fourths of the directors, officers, and employees of every banking association and savings bank
must be citizens of Louisiana; all directors of banking
associations and savings banks must be citizens of the
United States (179, sec. 4); a majority of the directors of
a corporation organized under the savings, safe-deposit,
and trust banking act must be citizens of Louisiana (45,
sec. 1). Directors of banking associations and savings




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Mon

etary

Commission

banks must meet once a month, at which meeting the
cashier reports a statement of the condition of the company to the directors (179, sec. 25).
If directors consent to dealing in any merchandise,
except such as is necessary to secure previously contracted
debts, they become personally responsible for all damages
and losses (179, sec. 11). If they assent to declare a dividend in excess of net profits, or a dividend which impairs the
capital and surplus, they are liable to the creditors of the
company for whatever loss occurs thereby (act 65 of 1900).
In case a banking association or savings bank after having
committed a continuing act of insolvency assigns its property, those officers who assist in such assignment are personally liable for the corporation's debts (179, sec. 18).
Directors who participate in the reduction of reserves
below the required amount are probably liable for the debts
of the banking company (R. S., 301). It is a crime for a
director or other officer of a banking institution or other
corporation accepting deposits or loans to accept deposits
or create debts with a knowledge that the corporation is
insolvent. The director or officer makes himself individually responsible for such deposits or debts (constitution, art. 269, and act 108, 1884).
III.—SUPERVISION.

The official in charge of banking in Louisiana is the
state examiner of state banks. He must be an expert
accountant and familiar with banking transactions; he
is appointed for a term of four years (constitution, art. 194,
and act 198 of 1898, sec. 1); his salary is $2,500 a year
(act 198 of 1898, sec. 1); he may not receive any compensation or gift beyond this (act 198 of 1898, sec. 2).
Before doing business, every banking association and
savings bank procures a certificate from the examiner, to
obtain which it must furnish him with satisfactory proof of




208

Louis

iana

— General

Provisions

compliance with the statutory requirements (179, sec. 8).
The articles of association under which a banking association or savings bank organizes are published in the local
newspaper for four weeks (179, sec. 5); they contain such
items as the domicile of the banking association or savings
bank, the amount of its capital, number of shares, the
names and addresses of subscribers, and the names of
directors (179, sec. 7).
Whenever the examiner believes the capital of a banking
association or savings bank to be impaired, he proceeds,
with the assistance of two stockholders, to make an estimation of resources and liabilities; if he is then of the opinion that the capital is impaired to the amount of 20 per
cent he reports the result of his findings to the auditor,
who directs the banking association or savings bank to
make good the impairment within two months (sec. 179,
sec. 17). When the reserve of a banking association carrying on the business of a bank of discount, deposit,
exchange, and circulation falls below the required amount,
and remains so for ten days, the president must notify the
state examiner within twenty-four hours of the end of the
tenth day (179, sec. 15). This reduction of reserve probably warrants proceedings by the auditor for a liquidation
of the bank's affairs (R. S., 301).
An act of insolvency or violation of law is ground for
forfeiture of charter and a receivership (R. S., 284, and 179,
sec. 13). Various acts of insolvency are defined. One is
refusal to pay demand obligations, but the proviso is
added that with the consent of the governor or the auditor
of public accounts, any clearing-house association may agree
to suspend payment of demand obligations when this is
deemed necessary by a majority of the banks or bankers
forming the association, in order to protect stockholders
and creditors or avert financial panic (179, sec. 16).
S. Doc. 353, 61-2




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REPORTS.

F o u r times a year the examiner announces to each banking association and savings b a n k a certain past day on
which the condition of each corporation is to be reported to
him (179, sec. 19); each corporation within seven days after
t h e notice reports t h e condition of its business on the date
specified, which report is published by the examiner in
such manner as to secure the greatest possible publicity,
and by t h e banking association or savings b a n k in a local
newspaper (179, sec. 20). The form which is furnished
by t h e examiner includes the following items: Resources—
Demand loans, loans secured by mortgage, other loans
and discounts, overdrafts secured and unsecured, United
States bonds, Louisiana state bonds, other bonds, stocks,
securities, etc., banking-house furniture and fixtures, other
real estate owned, due from banks and bankers, checks
for the clearing house, checks and other cash items, lawful
money reserved in bank, gold coin, silver, nickel, and copper
coin, national-bank notes, and all issues of t h e United
States Government, and suspense account. Liabilities—
Capital stock paid in, surplus, undivided profits less expenses a n d taxes paid, due to other banks and bankers,
dividends unpaid, individual savings deposits, individual
deposits subject t o check, time certificates of deposit,
d e m a n d certificates of deposit, certified checks, cashier's
checks outstanding, bills payable, notes and bills rediscounted, certificates of deposit for borrowed money, and
amounts due to persons not included in the foregoing
(179, sec. 21 and 22).
At the monthly directors' meeting of banking associations and savings banks the cashier reports to the directors
a statement of the company's condition (179, sec. 25).
Certain reports of banking institutions are required to be
m a d e for purposes of taxation (act 170 of 1898, sec. 27).




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All incorporated institutions in Louisiana receiving
deposits or declaring dividends on money or evidences of
indebtedness publish annually in t h e official journal of the
State, once a week for four weeks in succession, a complete
list of unclaimed deposits or other claims, of more t h a n
$10, whenever these deposits or claims are of three years'
standing. When unclaimed for seven years these funds
are administered as vacant estates (act i n , 1874). It is
provided in a later statute (which is t h o u g h t t o repeal
act i n of 1874 only with respect to banking associations)
t h a t t h e bank examiner reports to the auditor all balances
on t h e books of banks and t r u s t companies t h a t have
remained uncalled for and unnoticed by t h e depositors for
ten years (act 288 of 1908).
The examiner reports biennially t o the legislature at t h e
commencement of each session a summary of t h e condition of state banks, banking associations, and savings
banks from which he has had reports, with an abstract of
total capital, total debts and liabilities, total resources
and assets, total specie held, and other useful information;
suggestions with regard to the banking laws; and a statem e n t of the banks, banking associations, and savings banks
t h a t have closed business during t h e preceding two years
(act 198 of 1898, sec. 5).
EXAMINATIONS.

The examiner must examine all state banks at least twice
every year (constitution, art. 194), when he believes the
capital of any banking association or savings b a n k to be
impaired he examines with two stockholders as described
above (179, sec. 17). When in t h e examiner's opinion,
after the examination, there is good cause to believe t h a t
any bank, banking association, or savings bank has made an
incorrect quarterly return, or is not in a sound condition,
or has not conformed to law, it is the examiner's d u t y to




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examine its affairs fully and if necessary close the operations of the institution while making a complete investigation, the results of which the examiner reports to the governor (act 198 of 1898, sec. 4, as amd. by 149 of 1900).
When a corporation organized under the act relating to
savings, safe deposit and trust banking business is acting
as fiduciary, the court appointing it may, if it thinks necessary, require the examiner to investigate the affairs and
management of the corporation (45, sec. 2).
IV.—RESERVE REQUIREMENTS.

In the act for banking associations and savings banks it
is provided that "every banking association carrying on
the business of a bank of discount, deposit, exchange, and
circulation,'' must keep in its office in lawful money of the
United States an amount equal to 8 per cent of its demand
deposits; it must also keep in lawful money on deposit,
subject to sight draft, an additional amount equal to 17
per cent of its demand deposits. The remaining 75 per
cent of its deposits it must keep in lawful money or in cash
balances in other solvent banks, or in discounted paper
having not more than twelve months in which to mature,
or in such bonds as are described in section 3 of 179, given
below under VI (179, sec. 14).
If the reserve falls below the requirement and remains
so ten days, the president must notify the examiner.
Thereafter it is not lawful for the bank to discount any
new paper until the reserve has been reestablished. This,
in section 15, is the only consequence (prescribed in
179) of failure to preserve the reserve. It was law before
the passage of 179, however, that a violation of the reserve provisions of the Revised Statutes should be an act
of insolvency for which the affairs of the company might
be liquidated (R. S., 301). If R, S. 301 ha$ been repealed.




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it is by virtue of sec. 16 of 179, as amended b y act 140
of 1906.
Banks organized under t h e act dealing with savings,
safe deposit and trhst banking must maintain a reserve
in lawful money of t h e United States or in cash due from
other banks or bankers equal to 25 per cent of demand
deposits; 8 per cent of demand deposits m u s t be kept on
the premises in cash; for the remainder of demand deposits
there m u s t be kept on hand lawful money of t h e United
States or cash due from other banks, or bills of exchange,
or discounted paper maturing within a year, or securities
of t h e United States, any state, or any American public or
private corporation (No. 45, sec. 5).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

No banking association or savings b a n k m a y loan to any
one borrower more t h a n 20 per cent of its stock, surplus,
and undivided profits unless the loans are secured b y good
collateral or solvent endorsements (179, sec. 26).
No banking association or savings b a n k m a y lend to any
officer or employee of t h e corporation engaged in its active
management unless t h e loan is approved b y t h e directors
by a vote in which t h e applicant for the loan does not participate (179, sec. 26).
No banking association or savings bank m a y loan on a
pledge of its own stock (179, sec. 9).
VI.—INVESTMENTS.

Banking associations and savings banks m a y only hold
real estate when necessary for t h e transaction of their
business; when mortgaged t o t h e m to secure loans; when
conveyed to t h e m to satisfy previously contracted debts;
and when purchased at sales under judgment or mortgage
in favor of themselves (179, sec. 3).




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Banking associations and savings banks m a y invest in
bonds of the United States, of Louisiana, of levee districts
in Louisiana, and of such municipalities of Louisiana as
have not defaulted in interest on their bonds for five years
preceding (179, sec. 3). No banking association or savings
b a n k m a y hold its own stock for a longer time t h a n six
m o n t h s (179, sec. 9). Banking associations and savings
b a n k s are prohibited from dealing in cotton, sugar, or any
kind of merchandise except to secure a debt previously
contracted (179, sec. 11). Savings banks m a y b u y and
sell such promissory notes as are secured b y good and
sufficient collateral securities worth 50 per cent more t h a n
t h e loan (179, sec. 3).
Banks organized to conduct a savings, safe deposit, and
trust banking business m a y hold only such real estate as
is necessary for their business, or has been mortgaged to
secure loans, or has been conveyed to satisfy previously
contracted debts, or has been bought at a sale under judgm e n t or mortgage. With the exception of real estate held
in t r u s t or for t h e transaction of their business, they may
not hold real estate for a longer period t h a n ten years.
These corporations may hold such personal property,
including securities of t h e United States or of any State
of t h e United States or of any public or private corporation,
as m a y be necessary or convenient to the objects of t h e
corporations (45, sec. 1).
VII.—OVERDRAFTS.

Overdrafts are allowed, for they are referred to in t h e
list of resources in reports (179, sec. 22) and also in another enumeration of assets of banking corporations (179,
sec. 30).




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VIII.—BRANCHES.

Corporations organized under the savings, safe deposit,
and t r u s t banking law m a y have " o n e or more offices of
discount and deposits" in the municipality or parish
where the company is located (45, sec. 7).
X.—UNAUTHORIZED BANKING.

The business of banking m a y be carried on only by corporations organized under the laws of Louisiana or of the
United States, b y individual citizens of Louisiana, and by
firms domiciled in Louisiana whose active members are
citizens of Louisiana. Unless incorporated no banker shall
use t h e title " b a n k i n g association," or "savings b a n k "
(179, sec. 1). Every savings b a n k m u s t m a k e use of t h e
words "savings b a n k " in its title (179, sec. 3).
XI.—PENALTIES .

If a banking association or savings bank begins business without authority from the examiner, or without its
capital having been paid up, it is punished b y a fine not
exceeding $500 laid upon the directors and managers
(179, sec. 8). Moreover, banking associations and savings banks t h a t do not complete their required capital
m a y lose their charters (179, sec. 29). The banking association or savings bank t h a t violates t h e rule requiring a
surplus, or t h a t forbidding the p a y m e n t of dividends
unless earned forfeits $500 (179, sec. 30). The banking
association which is guilty of a continuing act of insolvency forfeits its corporate rights (179, sec. 13). If the
president of a banking association carrying on the business
of a b a n k of discount, etc., does not report an impairment
of reserve within eleven days, the banking association
forfeits $10 per day (179, sec. 15),




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The banking association or savings b a n k which fails to
t r a n s m i t its report to the examiner, publish it, and furnish
proof of the publication r becomes liable to a penalty of
$50 (179, sec. 20). A further provision of t h e same act
makes it the d u t y of the district attorney of the local parish
to sue t h e banking association or savings b a n k t h a t fails
to furnish its report on time for a penalty of $100 (179,
sec. 23). Any incorporated institution receiving deposits or
declaring dividends on money or evidences of indebtedness
must, if it fails to publish its unclaimed deposits, etc., p a y
a penalty of $1,000; if, after suit for this $1,000 has been
begun, t h e institution still fails to publish, it becomes subject to a further penalty of $2,000 a m o n t h (act i n of
1874, s e c - 3)- So far as it relates to state banking associations this penalty for not publishing unclaimed deposits
is thought to be repealed by act 288 of 1908.
A banking association or savings b a n k t h a t holds its
own stock for a longer period t h a n six months forfeits $10
per m o n t h per share (179, sec. 9). The banking association or savings b a n k t h a t deals illegally in merchandise
forfeits not more t h a n $1,000 (179, sec. 11).
The director or other officer who receives deposits after
a banking institution has become insolvent is liable to
imprisonment of from five to ten years (act 108 of 1884,
sec. 2). The director or officer of a banking association or
savings b a n k who assents t o a violation of t h e section dealing with the limit of loans to individuals and to officers is
fined $500 (179, sec. 26). The directors, officers, etc., of
banking companies, who perpetrate various frauds, among
t h e m concealment of the condition of t h e b a n k from
t h e examiner, are liable to imprisonment of from one to
three years (R. S., 877). The cashier of any banking association or savings bank who fails to notify stockholders
and directors of meetings, or t o present to t h e directors a
statement of t h e affairs of the corporation at t h e monthly




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Provisions

meeting, suffers a penalty of $25 (179, sec. 25). Officers
of a banking association or savings b a n k who fail to keep
proper accounts are subject to a penalty of $25 per m o n t h
(179, sec. 27).
Any examiner who receives extra compensation is
guilty of a misdemeanor, punishable by $500 fine, in default of p a y m e n t of which he is imprisoned from six months
to one year (act 198 of 1898, sec. 2).
Any person who maliciously circulates false statements
attacking t h e financial condition of any b a n k organized
under Louisiana law is guilty of a misdemeanor punishable
by fine, imprisonment, or both (act 251 of 1908.)




217

MAINE.
The digest for Maine is based upon a compilation of the
statutes issued by the banking department of the State,
including all laws through the session of 1907. This compilation has been compared with the statutes themselves
and found to include all material laws, except a few sections; these are added in the digest, together with amendm e n t s contained in two short statutes of 1909. Chapter 48
of t h e Revised Statutes, which include legislation through
t h e session of 1905, is entitled "Savings banks, Loan and
building associations, Trust and banking companies,
Foreign banking corporations." Many of the provisions
of chapter 48 apply clearly to savings banks. Those
which apply to building and loan associations, etc., are
omitted from t h e digest. The remaining sections apply
t o " t r u s t and banking companies." These sections are
supplemented b y an act passed in 1907 which states in its
title t h a t it is additional to and amendatory of chapter 48,
and t h a t it relates to the organization and management
of t r u s t companies. Under it, trust companies are all
given banking powers, and by one of its sections, a section
of chapter 48 dealing with banking and trust companies
is amended, using in the amendment t h e words simply
" t r u s t companies." I t is believed, therefore, t h a t none
of t h e provisions of the Maine statutes applies simply to
b a n k s ; so the digest is arranged under the heads simply




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—

Savings

Banks

of "Savings b a n k s " and " T r u s t companies." T h e references in t h e digest are either to the Revised Statutes, in
which case they begin with the letters R. S., or to the
public laws of 1905 or 1907, in which case the year is indicated.
Where statutes of 1905, 1907, or 1909 amend
directly a section in the Revised Statutes, t h e section is,
for t h e sake of saving space, cited b y its number in the
Revised S t a t u t e s simply, considering the .amendment as
incorporated in it. The chapter is given in each case, and
the number following is t h e section in the chapter.

SAVINGS BANKS.
I . — T E R M S O F INCORPORATION.

The s t a t u t e contemplates savings banks without capital
stock (R. S., chap. 48, 3). Three-fourths of t h e incorporators m u s t reside in the county where t h e bank is to
be located, and all members added to t h e number of
original incorporators must be citizens of t h a t county or
one adjoining it (R. S., chap. 48, 4 and 12). There must
be at least t h i r t y members; removal from t h e State or
failure for two successive years to a t t e n d annual meetings
is equivalent to resignation (R. S., chap. 48, 12).
Dividends m u s t n o t exceed iy2 per cent semiannually,
except as appears below. After passing the required
a m o u n t to reserve fund (one-fourth of 1 per cent of the
average deposits for the preceding six months) the trustees
accord dividends to depositors of three m o n t h s ' standing
a t least, unless the by-laws provide t h a t t h e period be
shorter. When the reserve fund amounts t o 10 per cent
of t h e average deposits for the six months previous to the
declaration of a dividend, all net profits still remaining are
divided every three years among depositors of one, two,




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a n d three full years' standing as extra dividends. Dividends must always be within t h e a m o u n t of actual
earnings (R. S., chap. 48, 28). No deposits m a y be
received under an agreement to pay a specified sum of
interest (R. S., chap. 48, 30).
The assets of a savings bank t h a t is connected with a
" national or stock bank " must be kept separate from t h e
assets of the national or stock b a n k (R. S., chap. 48, 34).
This reference t o a " stock bank " is the only intimation in
t h e statutes of t h e possibility of such a bank as different
from a t r u s t and banking company.
I I . — L I A B I L I T I E S AND D U T I E S O F T R U S T E E S .

There must be not less t h a n five trustees, not more t h a n
two of whom are allowed to be directors in any one national
bank, trust company, or other banking institution (R. S.,
chap. 48, 13). There are restrictions upon the positions
in other banking institutions which savings b a n k officers
may hold; and it is provided t h a t if t h e treasurer of a
savings bank having deposits not exceeding $150,000 is
cashier of a national b a n k or a t r u s t and banking company,
t h e board of trustees of the savings bank must not include
more t h a n one director nor more t h a n two stockholders
in t h e national b a n k or trust and banking company t h u s
connected with the savings bank (R. S., chap. 48, 14). A
trustee who becomes a trustee or officer of another savings
corporation vacates his office (R. S., chap. 48, 15). The
trustees m a y receive such compensation for their services
in making examinations and returns as m a y be fixed b y
t h e corporation in meeting (R. S., chap. 48, 16). I t is t h e
d u t y of a t least two of the trustees once a year to m a k e t h e
examination described below (R. S., chap. 48, 39). No
officer of a savings bank m a y take a fee or commission on
account of a transaction to which the bank is a p a r t y
(R. S., chap. 48, 40).




220

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Banks

III.—SUPERVISION.

The state officer who supervises banking is t h e bank
commissioner, who holds office for three years and m u s t
not be an officer in any b a n k in the S t a t e (R. S., chap.
48, 1). His salary is $2,500 a year (1905, chap. 159). The
bank commissioner approves of t h e place chosen to deposit
the securities held b y savings b a n k s ; they m u s t be kept
within the State (R. S., chap. 48, 35).
Before granting permission to a savings bank to do business, t h e commissioner determines whether there will be
greater access t o a savings b a n k afforded a considerable
number of people by opening t h e one proposed, and
whether t h e responsibility, character, etc., of t h e incorporators are such as to command confidence (R. S., chap.
48, 7). He does not grant a certificate unless satisfied of
these points and t h a t the organization as proposed will
be a public benefit (R. S., chap. 48, 8). He m a y require
a savings bank to charge down its investments on its books
to w h a t he considers a proper value (1909, chap. 149,
amending R. S., chap. 48, 23).
If upon examination the commissioner is of opinion t h a t
any savings b a n k is insolvent or t h a t its condition is such as
to make its further proceedings hazardous, he must apply
for an injunction to stop its business. If he is of opinion
t h a t it has exceeded its powers or has failed t o comply
with law, he m a y apply for t h e injunction. The court m a y
grant such decrees as t h e case warrants, including t h e
appointment of receivers (R. S., chap. 48, 44). Their conduct of t h e liquidation is detailed (R. S., chap. 48, 45, 46,
and 47). If a savings bank is insolvent on account of
depletion in its assets without fault of its trustees, then,
on petition of a majority of t h e trustees and t h e b a n k
commissioner, t h e court m a y set a time for examination,
and, on being satisfied t h a t t h e corporation has complied




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with law, m a y decree a reduction of deposits of each depositor so as t o divide t h e loss pro rata. The savings b a n k t h e n
proceeds with its business with t h e deposits as reduced,
although if such a sum is realized from t h e assets as to make
it possible to set t h e deposits a t their original figure or
raise t h e m toward it, t h a t is done (R. S., chap. 48, 48).
The court m a y grant orders restraining the paying out of
funds, t h e declaration of dividends, etc. (R. S., chap. 48,
49). Voluntary liquidation under order of court is provided for a t the request of the commissioner and a
majority of t h e trustees (1907, chap. 128).
REPORTS.

After the annual election a list is published of officers
and incorporators; the same list is transmitted to the commissioner (R. S., chap. 48, 17). The treasurer of every savings bank, on forms furnished by t h e commissioner, annually reports its condition at such time as t h e commissioner
designates, transmitting the report to him within fifteen
days after receipt of his request (R. S.> chap. 48, 37). A t
least two trustees annually, after examining the affairs of t h e
savings bank and settling the treasurer's account, report
the condition of t h e bank to the commissioner, on blanks
furnished by him, and after notice from him (R. S., chap.
48, 39). The treasurer publishes annually in a local newspaper a statement of t h e name, t h e a m o u n t standing t o
his credit, residence and fact of death, if known, of every
depositor who has not dealt with his deposit for more t h a n
t w e n t y years, this does not apply if the treasurer knows
t h e depositor to be living. A copy of this statement is
sent t o the commissioner (R. S.,chap. 48,38). Receivers
of savings b a n k s report annually t o t h e commissioner, or
oftenerif he requires (R. S., chap. 48, 44).
(For reports required of savings banks for purposes of
taxation, see R. S., chap. 8, 53 et seq.)




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Banks

Annually the commissioner reports to the governor and
council the condition of all savings banks he has examined,
with such suggestions as he deems expedient (R. S.,
chap. 48, 50).
EXAMINATIONS.

Weekly balances and annual statements of the amount
of individual deposits, with the aggregate of deposits, are
required of the treasurer (R. S., chap. 48, 36). At least
two of the trustees once a year examine the affairs of the
savings bank, settle the treasurer's account, and report to
the bank commissioner the condition of the savings bank
as he requires (R. S., chap. 48, 39). The commissioner or
one of his clerks as deputy visits every savings bank once
a year, and oftener if he deems it expedient, to inspect
its affairs, its ability to fulfill its engagements, and its
compliance with law. A copy of the commissioner's
statement is published in a local newspaper (R. S., chap.
48, 1 and 42).
V.—DISCOUNT, LOAN, AND DEPOSIT RESTRICTIONS.

No loan may be made to any officer of a savings bank
or a firm of which he is a member (R. S., chap. 48, 27).
No savings bank may hold as security for loans more
than one-fifth of the capital stock of any corporation
(R. S., chap. 48, 25).
Savings banks must not receive from any one depositor
over $2,000, no interest is allowed to be paid to any
depositor if his deposits, including dividends, exceed
that sum, except in the case of deposits of widows,
orphans, etc., charitable institutions, and trust funds
(R. S., chap. 48, 19). Deposits may not be received
under agreement for a specified rate of interest (R. S.,
chap. 48, 30). No savings bank is required to pay any
depositor more than $50 at a time or in any month until
after ninety days' notice (R. S., chap. 48, 31).




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(For other provisions concerning loans, see VI, Investments, infra.)
VI.—INVESTMENTS.

Real estate in the city or town in which a savings bank
is located may be held by the savings bank to an amount
not exceeding 5 per cent of its deposits, or to an amount
not exceeding its reserve fund (R. S., chap. 48, 24).
Deposits may be invested only as follows: First—(a) In
public funds of the United States and the District of
Columbia; (6) in the public funds of any of the New
England States and of certain other enumerated States.
Second—(a) In the bonds of municipalities of New England States; (b) in the bonds of cities and districts of
enumerated States having a population of 75,000 or more,
if issued for municipal purposes and a direct obligation on
all taxable property; (c) in bonds of counties of 20,000
inhabitants or more in enumerated States if issued for
municipal purposes and a direct obligation on all taxable
property and not issued in aid of railroads, provided that
the net indebtedness of the county does not exceed 5 per
cent of the valuation of its property for taxes; (d) in
bonds of any city of 10,000 or more, in enumerated States,
if issued for municipal purposes and a direct obligation on
all taxable property and not issued in aid of railroads,
provided that the net indebtedness of the city does not
exceed 5 per cent of the valuation of its property for
taxes; (e) in refunding bonds of counties and cities above
enumerated issued to take up legally issued bonds, provided interest has been fully paid on the original bonds
for five years prior to the refunding, and provided the
counties and cities can otherwise meet the foregoing conditions; (/) in bonds and obligations of school district
boards, boards of education, etc., "in such cities/' authorized to issue bonds payable from taxes levied on all the




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Savings

Banks

property in t h e district, provided the population of t h e
district is 10,000 or more, and the population and assessed
valuation of t h e district are at least 90 per cent of population and valuation of the city in which the district is
located, and provided the net indebtedness of t h e district
does not exceed 5 per cent of its property as valued for
taxes; (g) in bonds or obligations of municipal or quasimunicipal corporations of Maine if a direct obligation on
all the taxable property of the corporation. Third—(a) I n
railroad bonds of Maine; (b) in first-mortgage bonds of
railroads in enumerated States; (c) in
first-mortgage
bonds of three named railroads; (d) in mortgage bonds of
a railroad leased to a dividend-paying railroad in New
England, if t h e lessee guarantees dividends and interest
of the lessor; (e) street railroad companies are not railroad companies for investment purposes; (/) in bonds of
street railroads in Maine and in first-mortgage bonds of
street railroads in other enumerated States, provided in
general, with certain minor distinctions, t h a t the paid in
capital stock equals 3 3 / ^ per cent of t h e mortgage debt and
has been expended on the road, or t h a t annual dividends
of 5 per cent have been paid for Brve years on an amount
of capital stock equal to one-third of the bonded debt;
no bonds secured by an open mortgage are legal under this
provision unless the mortgage provides t h a t t h e total
outstanding bonds shall never exceed 75 per cent of t h e
cash expended on t h e road; (g) in refunding bonds which
are of an issue to retire the entire funded debt under t h e
conditions as applied to first-mortgage bonds in (b), (c),
and (/) of t h e above, and which are secured b y a first
mortgage on t h e whole or any p a r t of t h e system.
F o u r t h — I n t h e mortgage bonds of New England water
companies earning more t h a n fixed charges, interest on
debts, and running expenses. Fifth—In bonds of other
corporations of Maine paying 5 per cent dividends.
S. Doc. 353, 61-2




15

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Mon

etary

Commission

Sixth—(a) I n stock of any b a n k or banking association
incorporated under t h e laws of Maine; (b) in t h e stock of
national banks in New England; (c) in t h e stock of railroad companies of Maine unincumbered by mortgage;
(d) in t h e bonds, stocks, or notes of any New England
railroad which has paid annual dividends of 5 per cent on
capital equal to one-third of its funded debt for ten years,
and in the stock or notes of four enumerated railroads;
(e) in the stock of any railroad leased to a dividend-paying
railroad in New England, if the lessee guarantees dividends and interest of the lessor; (/) in t h e stock of other
Maine corporations earning regular dividends of not less
t h a n 5 per cent a year. Seventh—(a) I n loans secured
by first mortgages of real estate in Maine and New H a m p shire to an a m o u n t not exceeding 60 per cent of the value
of t h e real estate; (b) in notes with a pledge as collateral
of securities in which the b a n k might invest, provided t h e
market value of the collateral is equal to the a m o u n t of
the loan; (c) in notes with a pledge as collateral of any
savings b a n k deposit book issued by a Maine savings
b a n k ; (d) in notes with a pledge as collateral of such
funds, bonds, notes, or stocks as in the judgment of t h e
trustees it is for the interest of the bank to accept, to an
a m o u n t not exceeding 75 per cent of their m a r k e t value;
(e) in loans to municipal corporations of Maine; (/) in
loans secured by a mortgage of personal property, if t h e
trustees approve; (g) in loans to corporations owning
real estate in Maine and conducting their business in
Maine. Ninth—There are provisions for valuing investments on t h e b a n k ' s books, under supervision of t h e commissioner, who m a y also require reports of corporations
whose securities are, or are likely to become, savings b a n k
investments (R. S., chap. 48, 23).
No savings b a n k m a y hold more t h a n one-fifth of t h e
capital stock of any corporation; no savings b a n k m a y




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M a i n e

—

Savings

Banks

invest more t h a n 10 per cent of its deposits, nor exceeding
$60,000 in t h e stock or notes of any corporation; no savings b a n k m a y have more t h a n 50 per cent of its deposits
in mortgages of real estate. The provisions of this paragraph, however, a n d of the two preceding paragraphs, do
not apply to real estate or other assets acquired by foreclosure or judgment, or in settlements to secure debts, nor
does this paragraph apply to bonds enumerated under
First, Second, Third, Fourth, and Fifth of t h e paragraph
above (R. S., chap. 48, 25).
Savings banks m a y deposit on call in Maine banks or
banking associations or national banks (R. S., chap.
48, 26).
X.—UNAUTHORIZED BANKING.

Whoever, not authorized by law, advertises his business as t h a t of a savings bank, or receives deposits under
t h a t pretense, forfeits $100 for each offense (R. S., # chap.
48, 52); it was so provided in t h e Revised Statutes, b u t a
law of 1905 apparently changes t h e provision b y enacting t h e following: No person, firm, or corporation, excepting those authorized under Maine or United States
law to conduct a b a n k or trust company business, may
use as p a r t of their n a m e t h e words " b a n k , " " s a v i n g s , "
etc.; t h e persons violating this either individually or as
members of a partnership or persons interested in a corporation m a y be punished b y fine of not more t h a n
$1,000, imprisonment for not less t h a n sixty days nor
more t h a n one year, or both (1905, chap. 171).
XI.—PENAi/fiES.
If t h e clerks of a savings b a n k do not publish t h e list
of officers and incorporators required, and return a copy
of this list to t h e commissioner, any clerk offending is liable
to a penalty of $50 (R. S., chap. 48, 17). If t h e treasurer




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Commission

of a savings b a n k neglects within sixty days after the
declaration of a dividend to credit it to t h e proper deposit
account he is punished by a fine of from $100 to $200
(R. S., chap. 48, 29). If the treasurer of a savings b a n k
fails to publish t h e annual report of undisturbed deposits
and transmit to t h e commissioner he is liable to a penalty
of $50 (R. S., chap. 48, 38). Whoever obstructs the
commissioner in the discharge of his d u t y is fined not exceeding $1,000 or imprisoned not exceeding two years (R. S.,
chap. 48, 43). Any officer of a savings b a n k who receives a commission on account of t h e transaction to which
t h e b a n k is a p a r t y forfeits $100 for each offense (R. S.,
chap. 48, 40). Any officer of a corporation who reports
falsely t o t h e commissioner when required to report information with respect to its securities as savings b a n k
investments, and any officer, employee, etc., of a savings
b a n k or t r u s t company who undertakes t o deceive t h e
commissioner with respect t o the value of t h e investments of t h e b a n k or trust company, suffers a fine of not
more t h a n $500, imprisonment for not more t h a n two
years, or b o t h fine and imprisonment (1909, chap. 149,
amending R. S., chap. 48, 23). Violations of law b y a
savings bank or its officers or trustees, unless otherwise
prescribed, are punishable b y a fine of from $100 t o $500
(R. S., chap. 48, 51).
T R U S T A N D B A N K I N G COMPANIES.
(The above is t h e phraseology of t h e sections in chapter 48 which apply to this sort of companies. Chapter
96, of 1907, is phrased to apply to ' ' t r u s t c o m p a n i e s ; "
a n d it gives them, in section 1, power to receive deposits.)




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Maine

—

Trust

Companies

I . — T E R M S OF INCORPORATION.

The proposed incorporators of a t r u s t company apply
to t h e examiner for a certificate t h a t public convenience
will be promoted b y t h e establishment of t h e corporation.
If he refuses t o issue this certificate, t h e application m a y
not be renewed for a year (1907, chap. 96, 3).
Stock m u s t be paid in at its par value in cash (1907,
chap. 96, 6). The minimum a m o u n t of paid-in capital
for t r u s t companies is $25,000 in towns or cities of not
more t h a n 5,000; $50,000 in those from 5,000 t o 10,000;
$75,000 in those from 10,000 t o 20,000; $100,000 in those
from 20,000 to 30,000; and $150,000 in those of over
30,000. Shares must be of $100 each (1907, chap. 96, 8).
The m a x i m u m of capital stock for a t r u s t company is
$1,000,000 (1907, chap. 96, 10).
Every t r u s t and banking company must set a p a r t as
a guaranty fund or surplus not less t h a n 10 per cent of
its net earnings for each year until this fund with accumulated interest amounts to one-fourth of t h e capital stock
(R. S., chap. 48, 81).
The assets of a n y savings b a n k connected with a
national or stock b a n k m u s t be kept separate from t h e
assets of t h e national or stock b a n k (R. S., chap. 48, 34).
All property held in trust, and t h e accounts concerned
with t h a t property, m u s t be kept separate. Trust funds
a n d t h e investments or loans of t h e m are not subject to
t h e other liabilities of t h e company (1907, chap. 96, 14).
II.—INABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

The shareholders in a t r u s t a n d banking company are
individually liable for t h e contracts and debts of t h e comp a n y to a sum equal to t h e par value of their shares and




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Monetary

Commission

in addition t o t h e a m o u n t invested in t h e m (R. S., chap.
48, 86).
There m u s t be n o t fewer t h a n five directors, twothirds of whom m u s t be residents of Maine. At t h e
option of t h e stockholders t h e affairs of t h e company
m a y be entrusted to an executive board of not less t h a n
five members, two-thirds of whom must be residents of
Maine, elected from t h e directors (1907, chap. 96, 11).
E a c h director m u s t own ten shares of stock (1907, chap.
96, 13). The directors or the executive board constitute
a board of investment; they keep accurate accounts of
loans and investments in such form as t h e examiner
directs (1907, chap. 96, 12).
Directors who are implicated in making excessive loans
to one person, firm, or corporation, or who vote for loans
to directors, officers, and employees, or are implicated
in t h e p a y m e n t of such loans, are personally liable for
t h e p a y m e n t of t h e m (1907, chap. 96, 22).
III.—SUPERVISION.

The commissioner referred to under Savings banks supervises trust and banking companies as well (R. S., chap.
48, 79). He determines if public convenience will be
promoted b y t h e establishment of any proposed t r u s t
company (1907, chap. 96, 3). H e passes upon t h e proposed establishment of branches (1907, chap. 96, 21). H e
passes upon such reserve depositaries as are n o t located
in Maine (R. S., chap. 48, 80). When he finds t h a t a
corporation has m a d e an illegal loan, he orders it reduced
(1Q07, chap. 96, 22).
H e has t h e same control with regard to liquidating
t h e affairs of a b a n k or trust company t h a t he has over
savings b a n k s — t h a t is to say, he must, according to
t h e provisions of Revised Statutes, chapter 48, section
44, apply for an injunction, if upon examination he thinks




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—

Trust

Companies

a company insolvent or in such condition t h a t its continuing business is hazardous for the public; he m a y apply if
he thinks it has exceeded its powers or failed to comply
with law. The court then grants whatever decree the
facts warrant, including the appointment of receivers if
necessary (R. S., chap. 84, 79).
The commissioner licenses foreign investment corporations and has authority over t h e m (R. S., chap. 84, 89 et
seq.).
(See also 1905, chap. 73.)
REPORTS.

A preliminary report, consisting of a complete list of
stockholders' names, residences, and number of shares held
by each is filed with the b a n k commissioner before incorporation (1907, chap. 96,6). After the election of directors
the company publishes a list of t h e m (1907, chap. 86, 11).
Every trust company must report its condition at such
times as t h e b a n k commissioner requires, and publish t h e
report as he directs (1907, chap. 96, 18). At least two
directors annually, when notified b y the commissioner, report on blanks furnished by him, and publish t h e report if
he requires (1907, chap. 96, 19). Receivers of banking and
trust companies must report annually, and at such times
as t h e commissioner requires, the progress m a d e in the settlement of t h e corporation's affairs; the commissioner gives
notice of this report and furnishes blanks for it (R. S.,
chap. 48, 44).
(For reports required of trust and banking companies
for purposes of taxation see R. S., chap. 8, 64 et seq.)
Annually b y December 1 t h e commissioner reports to the
governor and council the general condition of each banking and trust company, making such suggestions as he
deems expedient (R. S., chap. 48, 79).




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Commission

EXAMINATIONS.

When all t h e capital stock of a trust company has been
issued and a statement made to the commissioner, he makes
a preliminary examination to assure himself t h a t t h e statem e n t is true and t h a t preliminaries have been complied
with (1907, chap. 96, 6). At least two directors m a k e an
annual examination, the result of which they report to t h e
commissioner (1907, chap. 96, 19). Every b a n k and t r u s t
company is visited by the commissioner or one of his clerks
acting as deputy once a year, and oftener if he thinks it
expedient. The affairs are investigated to determine its
condition, its ability to fulfill its obligations, and its compliance with the law. The statement of the examination
m a d e b y the commissioner is published in a local newspaper (R. S., chap. 48, 1 and 42).
IV.—RESERVE

REQUIREMENTS.

Every trust and banking company having authority to
receive money on deposit must keep on hand in lawful
money or national-bank notes as a cash reserve an a m o u n t
equal to at least 15 per cent of its deposits t h a t are subject
to withdrawal on demand or within ten days; two-thirds
of this 15 per cent m a y be in balances payable on demand,
due from national banks or trust companies ot Maine, or
from any trust company located in other New England
States or in New York, approved by the commissioner.
One-third of t h e 15 per cent may consist of bonds of t h e
United States, t h e District of Columbia, any New England
State, and certain enumerated States, When the reserve
falls below the requirement no new loans may be m a d e
(R. S., chap. 48, 80).




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—

Trust

Companies

V.—DISCOUNT AND LOAN RESTRICTIONS.

No trust company may loan to a person, firm, or corporation an amount in excess of 10 per cent of its capital,
surplus, and undivided profits, except on approval of a
majority of the whole investment board, unless secured by
collateral; nor in excess of 25 per cent, except on the
same approval and secured by collateral which in the judgment of a majority of the investment board is of value
equal to the excess of the loan above the 25 per cent.
The discount of bills of exchange and of commercial paper
owned by the person actually negotiating it is not considered as money borrowed (1907, chap. 96, 16).
No trust company may loan to its directors, officers, or
employees, or make a loan on which an officer, director, or
employee is surety, or to any firm in which an officer,
director, or employee is a member, or to any person or on
the indorsement of any person who is a partner of an officer,
director, or employee, or to any corporation in the management of which a director, employee, or officer is interested, until the directors or the executive committee have
by a majority vote, exclusive of the director interested,
approved. The provisions of this paragraph do not prevent a trust company from giving to a person, firm, or
corporation a line of credit for a period of six months to
an amount not exceeding 25 per cent of capital, surplus,
and undivided profits, subject to the restrictions as to percentage of entire board and right of interested persons to
vote contained in this paragraph and the paragraph next
preceding (1907, chap. 96,17, amending R. S., chap. 48, 82).
Trust and banking companies must not loan on the
security of their own stock unless it is necessary to prevent
loss upon previous debt, in which case the stock must be
gotten rid of within a reasonable time (R. S., chap. 48, 83).




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M o n et ar y

Commission

VI.—INVESTMENTS .

The board of directors or the executive board of every
t r u s t company constitutes the board of investment.
They keep a record of all loans and investments,indicating
such particulars as the bank examiner directs (1907, chap.
96, 12). Trust and banking companies must not hold
shares of their own stock unless it is necessary to prevent
loss on a previous debt, in which case the stock must be
disposed of within a reasonable time (R. S., chap. 48, 83).
E v e r y trust company may hold " s u c h estate, real, personal, and mixed as may be obtained by the investment
of its capital s t o c k " (1907, chap. 96, 1).
VIII.—BRANCHES.

No t r u s t company may establish a branch in any city or
town other t h a n t h a t in which t h e parent institution is
located until it has received a warrant t o do so from t h e
bank commissioner, who is to issue this w a r r a n t only if he is
satisfied t h a t public convenience and advantage will be
promoted by t h e establishment of a branch, and t h a t t h e
unimpaired capital of the parent institution is sufficient
to comply with the provisions for minimum capital, reckoning t h e aggregate population of the home city and of all
cities and towns in which the company is authorized to
establish branches, including the one now proposed. No
trust company m a y establish a branch except in its own or
in an adjoining county (1907, chap. 96, 21).
X . — U N A U T H O R I Z E D T R U S T COMPANY B U S I N E S S .

No person, firm, or corporation excepting those duly
authorized under Maine or United States law to conduct
a b a n k or trust company business m a y use as p a r t of their
name the words " b a n k , " " s a v i n g s / ' "savings departm e n t , " " t r u s t , " " t r u s t and banking company," etc.




234

M ain e

—

Trust

Companies

Anyone violating this rule either individually or as a
member of a firm or as one interested in a corporation, is
liable to a fine not exceeding $1,000, imprisonment not
less t h a n sixty days nor more t h a n one year, or both
(1905, chap. 171). No person may, as a private banker
not specially authorized by the legislature, transact any
banking business except t h a t of discount and deposit;
the penalty for this with other offenses enumerated in the
section is $1,000 for each offense (R. S., chap. 48, 2).
XI.—PENAI/TTES.

Refusal on the part of officers, agents, etc., of a trust
and banking company to be examined, or any obstruction
of examination, entails a fine of not more t h a n $1,000 or
imprisonment not exceeding two years (R. S., chap.
48, 43). Directors, officers, and employees who are implicated in granting a loan in excess of the amount allowed
to be made to any person, firm, or corporation, and
directors who vote for a loan in violation of the provisions
against loans to officers, directors, and employees, or who
use money or are implicated in the p a y m e n t of such a loan,
are guilty of a misdemeanor (1907, chap. 96, 22). See
Savings Banks, X I , for the penalty for undertaking to
deceive the b a n k commissioner as to the value of investments (1909, chap. 149).




235

MARYLAND.
The Maryland statutes are in t h e Public General Laws,
published in 1904, and in the acts of 1906 and of 1908.
I n the Public Laws, Article X I is entitled "Banks;"
and
Article X X I I I , " C o r p o r a t i o n s , " contains certain sections (318-321) which deal with savings institutions;
others (339-342) which prescribe t h e conditions on which
trust, surety, and fidelity companies m a y become surety
on official bonds; and others (94-107, slightly amended
in 1908) which deal with safe deposit, trust, guaranty,
loan, and fidelity companies. The article on banking is
incomplete and much of it not pertinent to the matters
covered by t h e digest. I t is not always clear to w h a t
sorts of banking corporations each section applies. The
language is in one section " e v e r y bank and incorporated
institution in this State which is in the habit of receiving
deposits and declaring dividends" (5), in another, " e v e r y
banking association authorized by its charter t o do a banking business" (12), in others clearly directed to savings
banks (8, etc.). W h a t makes it seem clear t h a t t h e article
for t h e most p a r t is meant t o apply to all corporations
doing a banking business is t h e language of section 37,
which provides t h a t certain named sections of t h e article
shall not apply t o savings banks having no capital stock,
nor to corporations authorized to do a trust, fidelity,




236

Maryland

— State

Banks

surety, or deposit business. I t is likely, therefore, t h a t all
t h e provisions given in the digest under " Banks " apply to
savings banks and trust companies, except as overridden
by provisions digested under "Savings b a n k s " and under
'' Trust companies.'' The provisions for savings banks and
trust companies are so meager t h a t it has not been thought
worth while to separate t h e m completely under t h e
headings used generally in the digest. Citations which are
simply numbers in parentheses are to sections in Article X I .
BANKS.
I . — T E R M S OF INCORPORATION.

Every bank in Baltimore must have a capital of not less
t h a n $300,000 nor more t h a n $2,000,000, divided into
shares of $100 each. Not less t h a n $300,000 m u s t be fully
paid in lawful money of the United States before t h e corporation can do business (21). E v e r y bank located outside Baltimore m u s t have a capital of not less t h a n $50,000,
nor more t h a n $500,000, divided into shares of $100 each.
Not until $50,000 has been paid in lawful money of t h e
United States m a y t h e bank begin business (22).
Every stockholder is entitled to one vote for every share
he holds u p to ten; to one vote for every additional two
shares u p to one hundred; and to one vote for every additional five shares above one hundred. Shares must have
been held for four months before the election to entitle
the shareholders to vote (25, art. 1). Half-yearly dividends are m a d e to stockholders out of net profits (25,
art. 9).
Limitations on t h e amounts of debt which a b a n k m a y
owe are stated under V, infra.




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Monetary

II.—LIABILITIES

AND

DUTIES

Commission
OF

STOCKHOLDERS

AND

DIRECTORS.

T h e stockholders in every " b a n k i n g corporation" are
liable " t o t h e a m o u n t of their respective share or shares
of stock in such banking institution for all its debts and
liabilities upon note, bill, or otherwise" (29, and constitution, Art. I l l , sec. 39).
There m u s t be not fewer t h a n five nor more t h a n seven
directors, each a stockholder and a citizen of Maryland (24,
a n d 25, art. 2). No director m a y be at t h e same time
director of any other bank in Maryland. Once a year
t h e directors lay before t h e stockholders a statement of
debts remaining unpaid, and surplus profits (25, art. 3).
If t h e debts of a b a n k become greater t h a n its capital, t h e
directors under whose administration the excess is created
are liable personally for t h e excess (25, art. 7). If t h e
directors knowingly declare a dividend which impairs t h e
capital stock t h e directors implicated are individually
liable to the corporation for t h e proportion of capital so
divided (25, art. 9). Directors receive only such pay as
is voted at a stockholders' meeting (25, art. 10).
III.—SUPERVISION.

There seems to be no official charged with t h e d u t y of
superintending banks. The treasurer of t h e S t a t e appoints
an examiner for t h e purpose merely of making examinations (33). W h e n t h e treasurer of t h e State is satisfied
t h a t " a n y of t h e associations mentioned in this a r t i c l e "
(this language, broad as it is, does not, of course, include
national banks, although they are mentioned in t h e article) has failed to comply with t h e provisions of t h e article,
he declares, with t h e approval of t h e governor, t h a t t h e
charter of t h e corporation is forfeited, and, with t h e
assent of t h e governor, appoints a receiver who acts subject to t h e control of t h e local court (34).




238

Maryland

— State

Banks

REPORTS.

Every b a n k reports to the treasurer of t h e S t a t e not
less t h a n five times each year according to t h e form prescribed by t h e treasurer. Each report shows t h e resources
and liabilities of the b a n k a t the close of business on a
past day specified by the treasurer, to whom it is transmitted within five days of the receipt of t h e request. A
summary of t h e report is published in a local newspaper.
The treasurer m a y call for special reports when in his
judgment necessary (12). A further provision of t h e
same article requires t h a t the treasurer of t h e S t a t e
be furnished with a statement of a m o u n t of capital;
a m o u n t of debts due to t h e corporation and from it, specifying those due from and to other b a n k s ; deposits; cash on
hand, specifying coin and notes of other b a n k s ; value of
real estate held; and a m o u n t and value of stocks held—
showing these details at the close of business on t h e
first Monday of J a n u a r y and t h e first Monday of July.
These statements are required to be published (25, art. 4).
(For reports required for purposes of t a x a t i o n see
Public General Laws, Art. L X X X I , sec. 156 et seq.)
Banks m u s t cause to be published in a local newspaper
once a week for three weeks in September of each year a
list of t h e deposits and dividends unclaimed for three
years or more, with the names of the depositors so credited,
and amounts (5).
EXAMINATIONS.

The treasurer, with the approval of t h e governor,
appoints an examiner to visit " each and every association
mentioned in this article, doing business in this S t a t e
(excepting state banks which m a y be members of t h e
Baltimore clearing association, and as such required regularly t o submit to examination by a national bank




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Mon

etary

Commission

examiner)," at least once a year, or oftener if in his
j u d g m e n t necessary (33).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

No loan m a y be made by a b a n k to Maryland or t h e
United States to an a m o u n t exceeding $50,000, or to any
other S t a t e of t h e Union or to a foreign state to any a m o u n t
whatever (25, art. 17).
T h e total a m o u n t of debts which a b a n k m a y a t any
one time owe m u s t not exceed t h e a m o u n t of paid in
capital, b u t money deposited in t h e b a n k "for safe keepi n g " is not for this purpose considered as debts of t h e
b a n k (25, art. 7).
VI.—INVESTMENTS.

A b a n k m a y own only such real estate as is requisite
for t h e convenient transaction of its business, and such
as has been mortgaged to it, conveyed to it in satisfaction
of debts, or purchased b y it a t sales on judgments obtained for such debts. Real estate thus purchased a t
j u d g m e n t sale m u s t not be held for longer t h a n three
years, if judicious sale can be m a d e in t h e three years
(25, art. 13).
A b a n k m u s t not t r a d e in anything except commercial
paper and bullion, or t h e produce of its lands or of chattels taken as security, conveyed t o it to satisfy debts, or
purchased a t judicial sales in enforcing debts. A bank,
however, m a y m a k e temporary investments of its funds
b y purchase of t h e public debt of t h e United States, of
any State, of Baltimore, or of t h e county or city where
t h e b a n k is located (25, art. 14).
XI.—PENALTIES.

If any b a n k fails to publish unclaimed deposits its
president is liable to a fine of from $50 t o $100 (7).




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Maryland

— Savings

Banks

SAVINGS B A N K S .
TERMS OF INCORPORATION.

There m a y be savings banks without capital stock, for
certain sections of Article X I are expressly made inapplicable to "savings banks having no capital stock'' (37);
these sections are 12, t h e provision for at least five reports
every year; 33, t h e provision for examinations a t least
annually by an examiner appointed by the treasurer; 34,
the provision for voiding charters and appointing receivers when banks violate t h e law; and 35 and 36, provisions exempting banks from other examinations, and
providing a scale of fees for examinations. There m a y
also be savings banks with capital stock, however, for it
is provided t h a t t h e capital stock of any savings bank
incorporated under t h e general corporation law must not
exceed $1,000,000 (Public General Laws, Art. X X I I I ,
sec. 321). A section just preceding t h e one cited requires
directors t o make " s u c h dividends" to t h e depositors at
least every six months out of t h e interest and profits of
t h e institution as will not impair its deposits or credit
(Public General Laws, Art. X X I I I , sec. 319); t h e use of
'' dividends'' in this section is odd if t h e corporation contemplated is one in which there are stockholders.
REPORTS AND EXAMINATIONS.

The provisions for publication of unclaimed deposits
do not apply " t o savings banks nor to institutions which
receive deposits and compound t h e interest and dividends
as they become due " (5); t h a t is because t h e s t a t u t e provides especially for t h a t sort of report by savings banks.
I n October of every second year t h e treasurer of each
savings b a n k delivers to the comptroller a written statem e n t containing t h e name of every depositor, with t h e
a m o u n t standing t o his credit, who has not deposited or
S. Doc. 353, 61-2




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withdrawn money for twenty years. This does not apply
to persons known by the treasurer of the savings bank
to be living. The comptroller inserts these statements
in his next report to the legislature (8). These provisions
for reports of unclaimed deposits are in the article on
banks. In the article on corporations the savings bank
sections include a provision requiring directors to appoint
every twelve months five competent members of the corporation as a committee of examination, who after making
an examination publish a report of it in a local newspaper
(Public General Laws, Art. XXIII, sec. 319). Reports
of savings banks for purposes of taxation are dealt with in
Public General Laws, Article LXXXI, section 89.
LOANS.

A provision of the savings bank sections in the article
on corporations forbids loans to be made to an officer or
director (Public General Laws, Art. XXIII, sec. 318).
PENALTIES.

A special savings bank penalty provided for in the
article on banks is that of $500 for each failure of the
treasurer of a savings bank to report unclaimed deposits (9).
TRUST COMPANIES.
(The fact that section 37 of Article XI provides that
certain sections do not apply to corporations authorized
by their charters to transact a trust, fidelity, surety, or
deposit business implies that the other sections of the
article do; and in some cases the terms of the individual
sections may include trust companies—"every bank and
incorporated institution in this State which is in the habit
of receiving deposits," for example (5). The provisions
which are expressly withheld from operating on trust




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companies are the same that were given under savings
banks—five reports a year (12); annual examinations (33);
receivership proceedings for failure to comply with the
provisions of the article (34), etc. The matters covered by
sections 339-342 of Article XXIII, prescribing conditions
on which trust, surety, and fidelity companies may become
surety on< official bonds, with particular reference to foreign corporations, have not been included in the digest.
Sections 94-107, legislating for trust companies upon those
subjects with respect to which trust companies are exempted from the provisions of the banking chapter, are
digested below; these sections are generally made applicable to every ''safe deposit, trust, guaranty, loan, and
fidelity company. ")
STOCKHOLDER'S LIABILITY.

The stockholders in every "safe deposit, trust, and loan
company" are personally liable for the contracts, debts,
and engagements of the corporation to the amount of their
stock at par, in addition to the amount invested in the
stock (Public General Laws, Art. XXIII, sec. 104, amd.
b y 1908, c h a p . 153).
SUPERVISION.

Trust companies which do a "security or guarantee
business" must deposit securities worth $100,000 with the
state treasurer in trust for the holders of the company's
guarantees; other trust companies deposit securities
worth 15 per cent of the corporation's paid-up capital, and
not less than $30,000, in trust for depositors and creditors.
The securities must be of certain sorts (Public General
Laws, Art. XXIII, sees. 98 and 106). Doing business
without having made the required deposit entails a $100
a day forfeit (Public Cxeneral Laws, Art. XXIII, sec. 99,
amd. by 1908, chap. 385).




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If it appears to the treasurer from an examination that
a trust company has violated its charter or the law, or is
conducting its business unsafely, he orders a discontinuance of the illegal or unsafe practices; if any corporation
fails to obey an order or refuses to report, or if it appears
to the treasurer inexpedient for the corporation to continue business, he communicates with the attorney-general, who institutes proceedings (Public General Laws,
Art. XXIII, sec. 97).
REPORTS.

Every trust company which receives money on deposit
or assumes any obligation in Maryland must report semiannually its condition at the close of business on the last
days of June and December, showing amount loaned on
bond and mortgage, with a list of the bonds and mortgages not previously reported, payments on bonds and
mortgages previously reported, particulars with respect
to stock investments, amount loaned on pledge of securities with particulars, real estate investments, cash on
hand and on deposit with names of depositaries and
amount on deposit in each, liabilities of the corporation,
amount due depositors, and any other information required
by the treasurer. The treasurer may require additional
reports. He summarizes the condition of each trust company which reports or is examined, in a report made to
the legislature at each regular session (Public General
Laws, Art. XXIII, sees. 94 and 103). Reports for purposes of assessment for taxation are made in accordance
with Public General Laws, Article LXXXI, section 165.
EXAMINATIONS.

The treasurer, either personally or by an appointee,
examines each trust company annually, to determine the
condition and resources of the corporation, the conduct of




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Companies

its affairs, the prudence of its management, its investments, the security afforded its obligees, and its compliance with its charter and the law (Public General Laws,
Art. XXIII, sees. 95 and 96).
LOANS, DEPOSITS, AND INVESTMENTS.

The money held on deposit, or in trust, or the amount
loaned, must never exceed ten times paid-up capital and
surplus, nor may the outstanding loans ever exceed that
amount; this does not apply to court deposits (Public
General Laws, Art. XXIII, sec. 100). Among the items
required to be reported are: Loans on bonds and mortgages,
stock investments, loans ''upon the pledge of securities of
whatsoever kind," and real estate investments (Public
General Laws, Art. XXIII, sec. 94).




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MASSACHUSETTS.
The Massachusetts Revised Laws of 1902 contain three
chapters on t h e topics with which the digest is concerned:
113, Of savings banks and institutions for savings; 115,
Of banks and banking (a chapter of which much relates
to circulation, and much, with reference to supervision
especially, seems superseded b y chapter 590 of 1908,
which, though a savings-bank statute, contains sections,
2-15, of broad enough application to include b a n k s ) ; and
116, Of trust companies; besides chapters dealing with
cooperative banks, etc. The material from chapter 115
(that is to say, practically the whole digest u n d e r ' ' Banks '')
is characterized by the local banking officials, in a letter
from Mr. Charles L. Burrill, secretary, office of t h e b a n k
commissioner, as "absolutely obsolete and of no u s e ; "
b u t it is inserted in t h e digest because it has never been
repealed. Since t h e date of Mr. Burrill's letter a s t a t u t e
of 1909 has in effect forbidden banking by state banks
and even more positively reduced chapter 115 to t h e
condition of a dead letter, still, however, without actually repealing it; this new s t a t u t e amends a section
of chapter 590 of 1908 by adding a provision t h a t no
person, firm, or corporation, except savings banks, trust
companies, and cooperative banks incorporated under
Massachusetts law, and foreign banking corporations




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Banks

which were doing business a n d subject t o t h e commissioner's supervision on J u n e i, 1906, m a y "hereafter
transact business under any n a m e or title which contains
t h e word ' b a n k ' or 'banking,' as descriptive of said
business" (1909, chap. 491, 4, amending 1908, chap. 590,
16)0 Under this statute, even though it does not completely repeal t h e legislation on state banks, t h e interest
in t h e material in t h e digest under " B a n k s " (except
such of it as applies to other institutions—see I I I , I X ,
etc.—provisions, chiefly, of chapter 590 of 1908) becomes
academic.
A supplement to the Revised Laws carries amendments
and additions through the session of 1906, and the later
legislation is in the acts of 1907, 1908, and 1909. Chapter
590 of 1908 repeals chapter 113 of t h e Revised Laws,
amendments to it, and certain other acts, and provides
a complete new savings b a n k chapter. The references
to t h e Revised Laws consist of t h e letters, R. L., then the
chapter, t h e n t h e section or sections in the chapter which
are cited for the statement just m a d e ; t h e references to
the supplement and the 1907, 1908, and 1909 laws are
by year, chapter, and section.
BANKS.
I . — T E R M S O F INCORPORATION.

The business contemplated for banks under chapter
115 is t h a t of receiving deposits, loaning, and discounting " o n banking principles," and issuing circulating notes
(R. L., chap. 115, 30).
The capital stock of every bank must be not less than
$100,000 nor more t h a n $1,000,000, paid in in gold or




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silver money, one-half before the bank goes into operation, the remainder within the ensuing year (R. L., chap.
115, 2). No bank may begin business until the half of
its capital which is paid in has been examined and found
complete by three commissioners appointed by the governor (R. L., chap. 115, 3). No stock of a bank may be
transferred until the whole capital is paid in (R. L., chap.
115, 5). No person may hold more than one-half the
capital of a bank exclusive of stock he holds as collateral
(R. Iy., chap. 115, 6). In addition to the capital to which
a bank is entitled, the State may subscribe an amount
equal to 50 per cent of the capital authorized, in which
case the State takes its dividends (R. L., chap. 115, 7).
Stockholders are entitled to one vote for one share, and
for every two additional shares one vote more, but no
stockholder may have more than ten votes (R. L-, chap.
115, 10).
Dividends m a y be declared out of net profits every six
months (R. L., chap. 115, 30).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

Apart from provision for unlimited liability on circulating notes (R. L., chap. 115, 80), the only special provision for bank stockholders' liability seems to be that if
the capital stock is depleted by the directors' mismanagement those who are stockholders at the time are personally liable, except that no stockholder is liable to pay a
sum exceeding the amount of stock actually held by him
at the time (R. L., chap. 115, 85). Corporations may,
it seems, be stockholders, for these liabilities are, in terms,
put on corporate shareholders (R. L., chap. 115, 84 and 87).
There must be from seven to twelve directors, and for
a bank with a capital of $500,000 or more there must
be at least nine (R. L., chap. 115, 17). Each director




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— State

Banks

must hold at least five shares of stock and be a citizen of
Massachusetts; no one may be director in two banks at
the same time. A majority of directors must reside or
have their place of business in the county where the bank
is established, or within 10 miles of the bank (R. L., chap.
115, 18). The legislature may appoint extra directors in
proportion to capital which the State subscribes (R. L.,
chap. 115, 20). The cashier of a bank may not be a
director (R. L-, chap. 115, 29). The directors are required
to keep a book for record of discounts and proceedings at
meetings (R. L., chap. 115, 23). In case a bank becomes
indebted beyond twice the amount of its paid-in capital,
exclusive of sums due on account of deposits not bearing
interest, debts between banks, etc., the directors under
whose administration the bank becomes thus illegally indebted are personally liable for the excess to creditors of
the bank (R. L., chap. 115, 35).
III.—SUPERVISION.

The recent savings bank act (1908, chap. 590) provides
for officers to supervise all sorts of banking institutions.
There is a bank commissioner appointed for a three-year
term, who must not be interested in a bank, corporation,
or business that requires his supervision. He may engage
in no other occupation. His salary is $5,000 a year
(1908, chap. 590, 2). Information obtained by the commissioner and his subordinates from examinations and
reports may be divulged only to officers whose duties so
require (1908, chap. 590, 5). The commissioner, the
treasurer and receiver general, and the commissioner of
corporations constitute a board of bank incorporation
(1908, chap. 590, 4). Among their duties they exercise
supervision over a recently authorized form of cooperative corporation, called a "credit union" (1909, chap.
419). The commissioner may prescribe the manner in




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which the books and accounts of any bank are kept
and the extent to which they must be audited (1908,
chap. 590, 12).
If, in the opinion of the commissioner, a savings bank,
trust company, or other person, partnership, or corporation doing a banking business, or the officers or trustees
of such institution, have violated any law, he reports to the
attorney-general, who institutes a prosecution for the violation. If, in the opinion of the commissioner, such a
bank is conducting its business unsafely, he directs the
practices to be discontinued; and if the bank fails to comply or if, in the opinion of the commissioner, a trustee or
officer of the bank has abused his trust, the commissioner
must, after giving a hearing to the directors of the institution, either report to the shareholders or, with the consent of certain officials, publish whatever facts public interest seems to him to require (1908, chap. 590, 8). If, upon
examination, the bank seems insolvent or in such condition
as to render its continuance in business hazardous, the commissioner applies to court to restrain the bank from doing
business. If the bank seems to have exceeded its powers
or failed to comply with law, he may apply for such an injunction. As soon as he has applied to the court the commissioner takes possession of the affairs of the bank, pending action by the court. The court may appoint receivers
(1908, chap. 590, 9). During a receivership, if the commissioner thinks a receiver has violated his duty he presents the facts to the court (1908, chap. 590, 11).
Any committee appointed by the legislature may examine the affairs of any bank. If, upon examination, it is determined by the legislature that the bank has exceeded
its powers or failed to comply with law, its franchises may
be declared forfeited (R. Iy., chap. 115, 108). One-eighth
of the stockholders in number or interest in a bank may
choose a committee to investigate the bank's affairs. If,




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— State

Banks

upon examination, this committee considers the bank insolvent or in a condition to render further business hazardous, or thinks that the bank has exceeded its powers or
failed to comply with law, the committee reports to a
court, which may enjoin further business by the bank and
appoint receivers (R. L v chap. 115, n o ) . If the court is
satisfied from certificate of the auditor that a bank is insolvent or in a hazardous condition, or has exceeded its
powers, it may proceed as just explained (R. L., chap. 115,
i n ) . If the commissioner thinks a bank or its directors
or cashier has violated the law, he reports to the secretary
of Massachusetts, who notifies the attorney-general to
institute a prosecution (R. L., chap. 115, 114; and 1908,
chap. 590, 5, amd. by 1909, chap. 491, 3). The provisions
of this paragraph are those for supervision contained in
the Revised Laws; they have not been expressly repealed, though the provisions (given in the preceding
paragraph) contained in the act of 1908 seem designed
to supersede them.
For supervision of ticket-selling offices that accept deposits, see 1908, chapter 493; 1907, chapter 377; 1906,
chapter 408; and 1905, chapter 428.
REPORTS.

Banks are within the provision of the statute of 1908
that, "in addition to the reports required by law to be
made," they must make such other statements to the commissioner as he may require (1908, chap. 590, 1 and 13).
The provisions in the Revised Laws with regard to
reports by banks are the following: Banks doing business in certain districts of Boston must transmit every
Monday morning to the secretary of the Commonwealth
a statement of amount of capital stock; average amounts
due to and from other banks; deposits; loans; discounts;
specie and lawful money of the United States deposited in




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the bank of deposit of the Boston clearing house; this
statement to be based on the condition of the bank on
each day of the preceding week (R. L., chap. 115, 99).
Banks in other less central districts of Boston, and banks
outside of Boston, must, on the first Monday of each
month, transmit to the secretary statements generally
similar. This class of banks base their reports on their
condition on each Saturday of the preceding month (R. L-,
chap. 115, 100). An abstract of weekly and monthly
reports must be published in Boston papers by the secretary (R. L-, chap. 115, 102). The secretary must furnish
blank forms for these reports (R. L., chap. 115, 103).
The cashier of every bank must annually make a return
of the condition of the bank on the afternoon of any
Saturday named by the governor. The report must be
sent to the secretary of the Commonwealth within fifteen
days. The items are given in the statute (R. L., chap.
115, 104). The secretary after receiving the annual returns must cause an abstract to be printed, sending a copy
to each bank and one to the legislature (R. L., chap. 115,
107). Receivers must make annual report to the legislature showing their progress (R. L., chap. 115, 118).
The statute of 1908 provides that the commissioner
must annually make a statement to the legislature of the
condition of all incorporated banks, including those in the
hands of receivers, from which he has received a report
during the preceding year, together with such other information of the affairs of the banks as public interest may
require, with suggestions relative to the general conduct
and condition of the banks (1908, chap. 590, 15).
EXAMINATIONS.

The commissioner or a subordinate, at least once a year
and whenever he considers it expedient, visits every bank
in order to ascertain its condition, its ability to fulfill its




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— State

Banks

obligations, a n d its compliance with law. The information obtained by t h e commissioner is open only to t h e
inspection of officials in t h e course of their d u t y (1908,
chap. 590, 5). Upon application b y five or more officers,
trustees, creditors, or depositors t h e commissioner must
examine any bank (1908, chap. 590, 7). I n case banks
are in t h e hands of receivers, t h e commissioner or a subordinate examines t h e m a t least once a year, and oftener
if he considers it expedient. H e examines t h e reports
made b y receivers t o t h e appointing court, and presents
to t h e court any violation of d u t y b y a receiver which he
discovers (1908, chap. 590, 11).
In t h e sections of t h e Revised Laws given above before
Reports, are provisions for various examinations: A committee of t h e legislature m a y examine (R. L., chap. 115,
108). A committee chosen b y one-eighth of t h e stockholders in number or interest in a bank m a y examine
(R. L., chap. 115, n o ) . The commissioner m u s t visit
b a n k s ; he, as successor to t h e board of commissioners of
savings banks, is given such powers over banks as certain
repealed savings banks statutes gave t h a t board over
savings banks, and m u s t report t o t h e secretary of Massachusetts violations of law b y a b a n k or its directors or
cashier (R. Iy., chap. 115, 112, 113, and 115; also 1908,
chap. 590, 5, amd. b y 1909, chap. 491, 3). Three commissioners appointed b y t h e governor examine as a preliminary, t o m a k e sure t h e capital is paid in in coin, etc.
(R. L., chap. 115, 3).
IV.—RESERVE

REQUIREMENTS.

Every b a n k m u s t keep an a m o u n t of specie or lawful
money of t h e United States equal to 15 per cent of its
liabilities "for circulation and deposits." When from
weekly or monthly reports it appears t h a t its average reserve is less t h a n t h a t amount, no new loans m a y be made.




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Commission

Lawful money of t h e United States or specie specially
deposited b y a b a n k in Boston in the bank of deposit of
t h e Boston clearing house, and balances payable on dem a n d from certain other banks, are a p a r t of reserve
(R. L., chap. 115, 50).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

No loan may be made to a stockholder until t h e full
amount of his shares is paid in (R. L., chap. 115, 5). No
b a n k m a y have owing to it on loans m a d e on pledge of its
own stock more t h a n one-half its paid in capital (R. L.,
chap. 115,31); stock taken as security m u s t be sold within
six months after it becomes the bank's property (R. L.,
chap. 115, 32). The debts of a b a n k must not exceed
twice its paid in capital exclusive of sums due on account
of deposits not bearing interest; there must never be due
t o a bank more t h a n double its paid in capital (R. L.,
chap. 115, 33). Debts due from one b a n k to another,
however, and loans directly made by a bank to Massachusetts or t h e United States, etc., are for this purpose
not debts due (R. L., chap. 115, 34). No b a n k m a y
m a k e a loan or discount unless it is payable b y t h e b a n k
on demand in specie or in bills which t h e b a n k is authorized to pay out (R. L., chap. 115, 51). Without a special
vote of stockholders, no officer of a bank m a y be liable
to it t o an a m o u n t greater t h a n 8 per cent of its paid in
capital, or greater t h a n $40,000. The whole board of
directors must not be liable to an amount exceeding 30
per cent of the capital (R. L., chap. 115, 53). No b a n k
m a y loan or discount t o a manufacturing corporation
any financial officer of which is also cashier of t h e b a n k
(R. L., chap. 115, 54). Upon requisition of t h e legislature any bank m u s t loan t o t h e State an a m o u n t not
more t h a n 5 per cent of its capital, to be repaid in five
annual installments or in a shorter period. The t o t a l of




254

Massachusetts

— State

Banks

such loans demanded b y the S t a t e m u s t not a t any one
time exceed one-tenth of the capital of t h e b a n k (R. L.,
chap. 115, 55). Neither t h e cashier nor any officer under
him m a y borrow of the bank (R. L., chap. 115, 29).
No bank m a y issue notes, etc., payable " a t a future
day certain or with interest," except for money borrowed
of t h e State, or from a domestic savings bank, etc.;
banks m a y p a y interest on debts due other banks and
due municipalities, however (R. L-, chap. 115, 40).
VI.—INVESTMENTS .

A b a n k m a y hold real estate requisite for t h e convenient
transaction of its business, not exceeding, however, 12 per
cent of t h e a m o u n t of its capital, exclusive of real estate
held on mortgage, received on execution, or t a k e n to secure or satisfy debts (R. L., chap. 115, 39). Any b a n k is
subject to a penalty if it holds its own stock, except as
security for debts, or neglects to sell stock received as security within six m o n t h s after it has become t h e property
of t h e b a n k (R. Iy., chap. 115, 32). No b a n k m a y engage
in t r a d e or commerce, b u t it m a y sell property it holds in
pledge (R. L-, chap. 115, 38).
VIII.—BRANCHES.

These are forbidden (R. L-, chap. 115, 30).
IX.—OCCUPATION OF THE SAME BUILDING.

No savings b a n k m a y occupy t h e same office or suite
of offices with a national bank, t r u s t company, or other
b a n k of discount, nor occupy any office directly connected b y means of doors, etc., with t h e office of a national bank, t r u s t company, or other b a n k of discount
(1908, chap. 590, 19).




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X.—UNAUTHORIZED BANKING.

See introductory paragraph. L a t e legislation makes
banking b y state banks practically an impossibility. No
person, firm, or corporation, except savings banks, t r u s t
companies, cooperative banks, a n d certain foreign banks
t h a t were doing business in t h e State in 1906, m a y do
business under a n a m e which contains " b a n k " or " b a n k i n g " (1908, chap. 590, 16, amd. by 1909, chap. 491, 4).
XI.—PENALTIES.

Whoever obstructs an examiner in t h e course of his
d u t y is punished by a fine of not more t h a n $1,000, or
imprisonment for not more t h a n one year (1908, chap.
590, 6). An officer or employee of a b a n k who fails, when
required by t h e commissioner, to report, or, when so required, reports falsely, is punished b y fine of not more
t h a n $1,000, b y imprisonment for not more t h a n three
years, or b y b o t h (1908, chap. 590, 14). Occupation b y
a savings b a n k of offices with another b a n k is forbidden;
" a n y such corporation" violating t h a t provision is punished b y a fine of not more t h a n $500—this penalty,
though probably only for the savings bank, m a y include
t h e other b a n k whose office is shared (1908, chap. 590, 1
and 19). The president, vice-president, or treasurer of
a savings b a n k who holds t h e same offices or t h a t of
cashier, in a national b a n k or t r u s t company or any other
b a n k of discount, suffers a fine of not more t h a n $500
(1908, chap. 590, 20).
If t h e cashier is director of a bank, or if he or an officer
under him borrow of t h e bank, the b a n k forfeits $500 for
each offense (R. L., chap. 195, 29). A b a n k which holds
its own stock, except as security for debts, or neglects to
sell stock received as security within six months after it
has become t h e b a n k ' s own property, forfeits $500 for




256

Mass achus etts

— Savings

Banks

each offense (R. L,., chap. 115, 32). If a b a n k makes a
loan or discount of which t h e a m o u n t is not payable by
t h e b a n k on demand in currency, it forfeits $500 for each
offense (R. L., chap. 115,51). Exceeding t h e legal a m o u n t
of loans to officers is punishable b y a $500 fine (R. L.,
chap. 115, 53). Failure of a Boston b a n k to furnish the
weekly report required by t h e Revised Laws entails a penalty of $500; failure by a suburban bank, or one outside
Boston altogether, to furnish the monthly report, $25; if
t h e neglect continues ten days from t h e first Monday of
any month, there is a forfeit of $500 (R. L., chap. 115,
101). Failure t o report to t h e secretary of Massachusetts
with respect to t h e S a t u r d a y designated by t h e governor
entails a forfeiture of $100 for each day's neglect (R. L-,
chap. 115, 105). Obstructing an examination b y a committee of the legislature is punishable by fine of n o t more
t h a n $10,000 or imprisonment for not more t h a n three
years (R. L., chap. 115, 109). Receivers who fail to report
annually to t h e legislature forfeit $20 for each day's neglect (R. L., chap. 115, 118). A b a n k whose directors fail
to keep a record of discounts and of proceedings a t meetings forfeits $500 for each neglect (R. L., chap. 115, 23).
Failure to furnish a loan demanded by t h e S t a t e entails a
penalty of 2 per cent of t h e a m o u n t per m o n t h (R. L.,
chap. 115, 58).
SAVINGS BANKS.
I . — T E R M S OF INCORPORATION.

Savings banks are evidently institutions without capital
stock. Members of savings banks must be citizens of
Massachusetts; failure t o attend two consecutive annual
meetings is ground for forfeiture of membership (1908,
chap. 590, 27). Before t h e board of bank incorporation
authorizes t h e organization of any savings bank they
S. D o c 353, 61-2




17

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M o n et ar y

Commission

must assure themselves t h a t public convenience will be
promoted b y t h e establishment of the savings b a n k (1908,
chap. 590, 23).
Before making a semiannual dividend savings banks
set apart from net profits as a guaranty fund not less t h a n
one-eighth nor more t h a n one-fourth of 1 per cent of
total deposits until the fund amounts t o 5 per cent of
deposits, beyond which point it must not be increased
(1908, chap. 590, 59). The income of t h e savings bank,
after expenses and contributions to guaranty fund have
been deducted, is divided among depositors in t h e following manner: An ordinary dividend is declared every six
months out of earnings for t h a t period. There m a y be
appropriated, from earnings left undivided after t h e
declaration of a dividend, an amount sufficient to declare
an ordinary dividend; b u t t h e total dividends declared
during any twelve months must not exceed t h e income
during the period without written approval of the commissioner. Ordinary dividends must not exceed 2 ^ per
cent on amounts which have been on deposit for six
months, or i ) { per cent on amounts which have been on
deposit for three months. Savings banks need not p a y a
dividend on less t h a n $3 or on fractional parts of a dollar
(1908, chap. 590, 60). Before the meeting called to
declare a dividend t h e auditing committee m u s t examine
t h e affairs of t h e savings b a n k for t h e last six months to
determine net earnings (1908, chap. 590, 61). If t h e net
income for t h e preceding six months, above the a m o u n t
set apart for guaranty fund, does not amount t o 1 ^ per
cent of deposits, no dividend is declared except such as t h e
commissioner approves (1908, chap. 590, 62). Whenever
t h e guaranty fund and undivided net profits together
a m o u n t to \o% per cent of t h e deposits at the end of a dividend period, an extra dividend of not less t h a n one-fourth
of 1 per cent m a y be declared on all amounts which have




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Banks

been on deposit for six months, or not less than one-eighth
of i per cent on all amounts that have been on deposit for
three months; in no case may an extra dividend be paid
which reduces the guaranty fund and undivided profits
together to less than 10 per cent of deposits (1908, chap.
590,63).
If necessary to pay depositors, a savings bank, by vote
of its board of investment, may borrow money, pledging
any of its securities (1908, chap. 590, 67).
Chapter 561 of 1907 provides elaborately for the institution of insurance departments in savings banks.
II.—LIABILITIES AND DUTIES OF TRUSTEES.

There must be a board of investment of not less than
three, and a board of not less than eleven trustees. No
person may hold office in two savings banks at the same
time. Only one of the persons occupying the office of
president, treasurer, or clerk may be at the same time a
member of the board of investment (1908, chap. 590, 28).
Trustees must meet regularly at least once in three months
to receive the report of the treasurer, etc. A statement,
in the form of a trial balance, is prepared at each regular
meeting showing the condition of the corporation (1908,
chap. 590, 30). The trustees appoint an auditing committee of not less than two of their number, who cause a
thorough audit of the books, securities, and cash of the
savings bank to be made every twelve months (1908, chap.
590, 32). Failure of a trustee to attend regular meetings
and perform the duties of trustee for six consecutive
months, and bankruptcy, etc., are ground for forfeiture of
office (1908, chap. 590, 34). At least once in each fiscal
year an accurate trial balance must be made of the depositors' ledger (1908, chap. 590, 42). Any member of the
board of investment or officer charged with the duty of
investing the savings bank's funds who becomes indebted




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t o t h e savings b a n k or becomes t h e owner of real estate on
which the savings bank holds a mortgage vacates his
office (1908, chap. 590, 44). Immediately before meetings called to declare dividends, t h e auditing committee
m u s t examine the affairs for t h e preceding six months and
report t o t h e trustees the estimated net earnings (1908,
chap. 590, 61).
III.—SUPERVISION.

The b a n k commissioner and t h e board of b a n k incorporation, whose appointment is discussed under I I I , in
Banks, exert their powers under t h e savings-bank act,
although their authority extends over all banking
institutions.
If, in t h e opinion of the commissioner, a
savings b a n k has violated t h e law, he reports t h e fact to
t h e attorney-general, who prosecutes. If, in t h e opinion
of t h e commissioner, a savings b a n k is conducting its
business in an unsafe or unauthorized manner, a n d if it
fails to comply with his order to discontinue t h e practices, or if a trustee or officer has abused his trust, t h e
commissioner, in t h e case of a savings bank, m u s t report
t h e facts to t h e attorney-general, who m a y after a hearing institute proceedings for removal of trustees or officers,
or such other proceedings as t h e case m a y require (1908,
chap. 590, 8). See Banks, I I I , for t h e general provisions
requiring the commissioner to institute proceedings
against insolvent banks, to t a k e possession of those banks,
a n d to sue for a receiver (1908, chap. 590, 9). He m a y
prescribe rules for bookkeeping, audits, etc. (1908, chap.
590, 12).
T h e board of b a n k incorporation has authority to grant
or withhold t h e certificate t h a t public convenience will be
promoted by t h e establishment of a proposed savings
b a n k ; this certificate is a prerequisite to incorporation
(1908, chap. 590, 23). Every three years deposit books




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Banks

are called in for verification under rules approved b y t h e
commissioner (1908, chap. 590, 43). T h e commissioner
authorizes a declaration of dividends under certain extraordinary circumstances (1908, chap. 590, 62); m u s t be
notified when a savings b a n k borrows, pledging securities
(1908, chap. 590, 67); and performs certain duties with
respect t o investments, including t h e approval of investment in b a n k building. See VI, infra (1908, chap. 590,
68).
Provision is m a d e in t h e statutes for the disposal of unclaimed deposits (1908, chap. 590, 55 et seq.).
REPORTS.

The clerk of every savings b a n k publishes in a local
newspaper a list of the members and t h e new officers, after
every election. This list is included in t h e annual report
of savings banks t o t h e commissioner (1908, chap. 590, 29).
The trustees publish semiannually in a local newspaper the
names of t h e officers of t h e corporation charged with t h e
investing of its funds (1908, chap. 590, 30). T h e regular
reports are annual. Within t w e n t y days after t h e last
business d a y of October t h e treasurer reports t o t h e commissioner in a form prescribed b y t h e commissioner showing t h e condition of t h e savings })ank a t t h e close of business on t h a t day. The following items m u s t b e included:
N a m e of corporation and names of corporators and officers;
place where located; a m o u n t of deposits; a m o u n t of each
item of other liabilities; public funds, including all United
States, state, a n d municipal bonds; railroad bonds, streetrailway bonds, telephone bonds, a n d stock in banks and
trust companies, stating each particular kind, values, and
amount invested in each; loans t o municipalities; loans
on mortgage of real estate; loans on personal security;
estimated value of real estate, a n d a m o u n t so invested;
cash on deposit in banks a n d t r u s t companies, with t h e




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names of depositaries and amount deposited in each; cash
on h a n d ; t h e whole a m o u n t of interest or profits received,
a n d t h e rate and a m o u n t of dividends for t h e previous
year; t h e times for t h e dividends; the rates of interest
received on loans; t h e total a m o u n t of loans bearing each
specified rate of interest; the n u m b e r and total a m o u n t of
loans which do not exceed $3,000 each; the n u m b e r of
open accounts; t h e number and a m o u n t of deposits; t h e
n u m b e r and a m o u n t of withdrawals; the number of accounts opened and t h e number closed during t h e previous
year; annual expenses of the corporation; and such other
information as t h e commissioner may require (1908,
chap. 590, 37). Every fifth year t h e report gives other
statistics, including figures showing t h e a m o u n t of deposits of various sizes; t h e a m o u n t credited to women, t o
guardians, etc., received during t h e preceding twelve
m o n t h s (1908, chap. 590, 38). I n addition to the reports
required b y law, savings banks m u s t make whatever other
reports the commissioner requires (1908, chap. 590, 13).
The treasurer of every savings b a n k every five years
returns to the commissioner and publishes a statement of
t h e name, t h e a m o u n t standing to the credit, the last
known address, a n d t h e fact of death, if known, of each
depositor who has not deposited or withdrawn for t w e n t y
years. He need not report if t h e depositor in question is
known to an officer of the b a n k to be living, nor need he
report deposits for which the book has not been brought
in within twenty years to have interest added or to be
verified, nor need he report deposits which with accumulations are less t h a n $25 (1908, chap. 590, 39).
Each year t h e commissioner reports to t h e legislature,
as stated under Banks (1908, chap. 590, 15); t h e report
of unclaimed deposits must be included in this report
(1908, chap. 590, 39).




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Banks

EXAMINATIONS.

The commissioner or a subordinate at least every year,
and oftener if he thinks it necessary, examines every savings b a n k to ascertain its condition, its ability to fulfill
its obligations, and its compliance with law (1908, chap.
590, 5). On application of five or more officers, trustees,
creditors, or depositors, t h e commissioner makes a special
examination (1908, chap. 590, 7). Once a year, and
oftener if he thinks it necessary, t h e commissioner or a
subordinate examines banks in t h e hands of receivers,
reporting the result of his examinations to t h e appointing
court (1908, chap. 590, 11). Savings banks and their
officers are subject to examination b y committees of the
legislature (1908, chap. 590, 21). The auditing committee
of not less t h a n two trustees make a thorough audit of
t h e books, securities, and cash of their savings b a n k at
least once a year (1908, chap. 590, 32). The auditing
committee examine t h e income, profits, and expenses for
t h e preceding six months before a dividend is declared
(1908, chap. 590, 61).
V.—DISCOUNT,

L O A N , AND D E P O S I T RESTRICTIONS.

There is a board of investment which has charge of
loans and investments; it meets at least monthly (1908,
chap. 590, 31).
No president, treasurer, member of a board of investment, or officer charged with the d u t y of investing a savings bank's funds m a y borrow from t h e savings b a n k or
be surety for loans b y it, etc. (1908, chap. 590, 44).
Neither a savings b a n k nor anyone acting for it m a y take
a fee, commission, etc., on account of a loan made b y the
bank, other t h a n t h a t which appears on the face of the
contract of loan (1908, chap. 590, 45).




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A savings b a n k m a y receive on deposit from any person not more t h a n $1,000, and m a y allow interest on
principal and accumulated interest until t h e whole
amounts t o $2,000; thereafter interest will be allowed only
upon $2,000. This does not apply to deposits b y religious or charitable corporations labor unions, deposits
under order of court, or for t h e sinking fund of a municipality (1908, chap. 590, 46, amd. by 1909, chap. 491, 7).
For certain other loan provisions, see VI, below.
If necessary t o p a y depositors, a savings b a n k m a y borrow money, pledging securities for the loan (1908, chap.
590, 67). See VI, below, for certain restrictions on loans
given under investments because so classified in t h e
statutes.
VI.—INVESTMENTS.

There is a board of investment of not less t h a n three,
who are in charge of investments (1908, chap. 590, 28).
They meet at least once a m o n t h to approve loans, purchases or sales of bonds, stocks, etc. (1908, chap. 590, 31).
The provisions for savings-bank investments are so
extremely long and complicated t h a t the finer distinctions and provisos have had to be ignored here. Stated
in as condensed a form as possible, investments m a y b e :
First.—In first mortgages of real estate in Massachusetts. Not exceeding 60 per cent of the value of t h e real
estate nor more t h a n 70 per cent of the whole a m o u n t
of deposits m a y be thus invested. If the loan is on
unimproved and unproductive real estate, t h e a m o u n t
loaned must not exceed 40 per cent of the value of t h e
real estate. The board of investment, or two of t h e m ,
value the mortgaged premises a t least once every five
years.
Second.—(a) I n t h e public funds of t h e United States
or of any of t h e New England States, (b) I n bonds or




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Banks

notes of a Massachusetts county, city, or town, (c) In
bonds or notes of an incorporated district in Massachusetts whose debt does not exceed 5 per cent of its property's
valuation for taxes, (d) In the bonds or notes of municipalities of the other New England States whose debt does
not exceed, for certain classes, 5 per cent, and for others
3 per cent, of the valuation of the property of the municipality for taxes, (e) In bonds of certain named States,
and the bonds of municipalities of those States which
have 30,000 inhabitants and a debt not exceeding 5 per
cent of the valuation of property for taxes; bonds of
municipalities in other named States having more than
200,000 inhabitants and a debt not exceeding 7 per cent
of the valuation of the property.
Third.—(a) In bonds or notes of a railroad incorporated
in Massachusetts and located wholly or in part there,
which has paid 4 per cent dividends on all its stock for
five years; or in first-mortgage bonds of a terminal company incorporated in Massachusetts and located there,
if it is owned or operated, or its bonds are guaranteed,
by such a railroad. (6) In bonds or assumed bonds of a
railroad corporation incorporated in any of the New
England States, if at least one-half its road is located in
those States, whether the road is in possession of the company or leased to another, provided that the bonds are
either secured by a first mortgage of the railroad's property, or by a refunding mortgage as described in (3) or (4)
of (g), or, if the railroad of the corporation is unencumbered by mortgage, then the bonds are issued under a
statute providing that after an issue of bonds the railroad
may not execute a mortgage without securing by it previous liabilities, and provided that this railroad has paid
4 per cent dividends on all its capital stock for five years,
(c) In first-mortgage bonds or assumed first-mortgage




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bonds, or bonds secured by a refunding mortgage as described in (3) or (4) of (g), of a railroad incorporated in any
New England S t a t e whose road is located wholly or in
p a r t there which have been guaranteed b y a railroad described in (a) or (b) which is operating its own road, (d)
No bond is m a d e a legal investment by (b) unless t h e corporation issuing or assuming t h e bond has during t h e preceding year paid in dividends an amount equal to onethird t h e interest paid on its funded debt direct or assumed.
No bond is m a d e a legal investment b y (c) unless t h e
guaranteeing corporation has during t h e preceding year
paid in dividends an a m o u n t equal t o one-third t h e interest paid on its funded debt, direct, assumed, and guaranteed, (e) In mortgage bonds, as described below under
this clause, of any railroad incorporated under the laws
of any of t h e United States; provided (1) t h a t during each of t h e last ten years t h e railroad owned 500
miles of line within the United States, or if owning less,
then t h e gross earnings of t h e railroad were $15,000,000;
(2) t h e railroad has paid m a t u r e d principal and interest of mortgage debt; (3) t h e railroad has paid 4 per
cent dividends on all its stock; (4) the gross earnings,
including those of controlled roads and those of controlled mines, have not amounted to less t h a n five times
t h e a m o u n t necessary to pay interest on entire debt,
rentals, and interest on debts of controlled lines; b u t (5)
no bonds are m a d e a legal investment by (g) if t h e mortgage authorizes a total issue of bonds which m a k e t h e
whole authorized debt of t h e company exceed three
times its stock; (6) no bonds m a y be m a d e a legal
investment b y (i) or (/), if t h e mortgage securing t h e m
authorizes an issue of bonds which, added t o t h e total debt
of t h e guaranteeing corporation, exceeds three times t h e
capital of t h e guaranteeing corporation, nor in case t h e
total debt of t h e issuing corporation exceeds three times




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—

Savings

Banks

its capital. (/) A "first m o r t g a g e " must be on not less
t h a n 75 per cent of t h e railroad owned by the company in
question, and in no case less t h a n ioo continuous miles of
road: provided t h a t 75 per cent of t h e road is connected;
t h a t for five years all the road subject to t h e mortgage has
been operated b y t h e road which issues, assumes, or guarantees t h e bonds; and t h a t t h e date of t h e mortgage is at
least five years prior to the investment, (g) Bonds issued
or assumed by a railroad described in (e) which are secured
by a mortgage which was, at its date or at the date of the
investment, (1) a first mortgage on railroad owned by the
issuing or assuming corporation, except t h a t if not a first
mortgage on 75 per cent of t h e railroad owned by t h e corporation, it must be a first mortgage on 75 per cent of the
road subject to the lien of t h e mortgage at its d a t e ; b u t if
any stocks or bonds are deposited with t h e trustee of t h e
mortgage as p a r t of its security, t h e bonds secured by the
mortgage are not legal investments unless t h e corporation
owns at least 75 per cent of t h e total mileage which is
subject t o t h e lien of t h e mortgage and is represented by
t h e stocks or bonds; (2) a first mortgage, which is in effect
a first mortgage on all railroad subject to its lien, by virtue
of the irrevocable pledge with a trustee of an entire issue
of bonds t h a t are a first lien on the road of a company
which is operated by the corporation issuing or assuming
the bonds; (3) a refunding mortgage covering a t least 75
per cent of t h e road owned by t h e corporation a t the date
of t h e mortgage and providing for t h e retirement of
mortgages which are prior liens, with certain requirements, particularly where t h e mortgaged property is not
owned in fee by t h e corporation executing the refunding
mortgage; (4) a mortgage on not less t h a n 10 per cent
of a road owned b y the corporation issuing or assuming t h e bonds, b u t not less t h a n 500 miles of line. provided
t h a t t h e mortgage is a first or second lien on not less t h a n




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Commission

75 per cent of t h e t o t a l road covered by t h e mortgage at
its d a t e and provides for t h e retirement of all mortgage
debts which are a prior lien; t h a t t h e bonds secured b y t h e
mortgage m a t u r e at a later d a t e and cover 25 per cent
more property t h a n any of t h e bonds secured b y prior lien;
and t h a t t h e d a t e of t h e mortgage is five years prior to
t h a t of t h e investment, (h) Mortgage bonds, or bonds
secured b y mortgage bonds, which are an obligation of a
railroad whose refunding bonds are a legal investment under
(3) or (4) of (g): provided t h a t t h e bonds are t o be refunded
by the refunding mortgage; t h a t t h e refunding mortgage
covers all t h e real property on which t h e mortgage securing
t h e underlying bonds is a lien; a n d t h a t , in case of bonds
guaranteed or assumed, t h e corporation issuing t h e m is
operated b y t h e railroad corporation, (i) Bonds which
have been guaranteed b y indorsement b y a railroad which
has complied with all t h e provisions of (e), provided t h a t
t h e bonds are secured by a first mortgage on t h e railroad
of a corporation operated by t h e guaranteeing corporation,
and t h a t , in t h e case of a leased road the entire capital of
which is not owned b y t h e lessee,, the rental includes an
a m o u n t to be paid t h e stockholders of t h e leased road
equal t o at least 4 per cent on t h a t portion of t h e capital
not owned b y t h e lessee. (/) First-mortgage bonds of a
railroad corporation which has for ten years complied with
(2), (3), and (4) of (e), provided t h e bonds are guaranteed
b y a railroad company which has complied with all t h e requirements of (1), (2), (3), and (4) of (e), notwithstanding
t h a t t h e railroad of t h e issuing corporation is not operated
b y t h e guaranteeing corporation, (k) Bonds which are a
legal investment are n o t rendered illegal even though t h e
corporation issuing, assuming, or guaranteeing t h e m fail
not longer t h a n two years t o comply with t h e requirements
of (4) of (e). No further investment is m a d e during t h a t
period in the bonds of the corporation in question, b u t if,




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— Savings

Banks

during t h e year following its two years' unsatisfactory condition, it complies with all t h e requirements of (e), it is then
regarded as having complied with them throughout. (I)
Bonds which are a legal investment are not rendered illegal
by t h e fact t h a t t h e property upon which they are secured
is acquired b y another railroad; and although t h e issuing
or assuming corporation is consolidated with another, if
t h e consolidated or purchasing corporation assumes t h e
p a y m e n t of t h e bonds, and so long as it pays interest or
dividends on the securities issued t o effect t h e consolidation
to an a m o u n t equal to 4 per cent at least on t h e capital
of the issuing or assuming corporation, the bonds remain
a legal investment, (m) If a railroad which has complied with all t h e requirements of (1), (2), (3), and (4)
of (e) for more t h a n five, b u t less t h a n ten years, is
merged with another railroad, t h e succeeding corporation is considered as having complied with t h e first four
provisions of (e) during those years preceding t h e date of
merger during which all the merged corporations, if considered as one corporation, would have so complied; provided t h e succeeding corporation continues to comply for
a period making t h e total ten years, of which t o t a l not
less t h a n two years are under the consolidation, (n)
Railroad does not include street railway. The commissioner prepares annually a list of authorized investments
under Third.
Fourth.—Certain
investments m a d e prior t o t h e act of
1908 m a y continue to be held.
Fifth.—In t h e bonds of any street railway company incorporated in Massachusetts and located wholly or in p a r t
there, which has paid dividends of 5 per cent on all its
stock for five years. The commissioner's annual list includes those bonds and notes which are authorized under
Fifth.




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Sixth.—In t h e bonds of any telephone company a majority of whose directors are residents of Massachusetts,
provided t h a t for five years the company has satisfied these
requirements: (i) Its gross annual income has been a t
least $10,000,000; (2) it has paid principal and interest
of all its debts; (3) it has paid 6 per cent dividends; (4)
t h e dividends have not been less t h a n the total a m o u n t
necessary to p a y all interest; these bonds, moreover, m u s t
be secured either b y a first mortgage of 75 per cent of t h e
property of t h e company, or by t h e deposit of bonds and
shares of other telephone companies, under a trust agreem e n t limiting t h e amount of bonds to 75 per cent of t h e
value of t h e securities deposited; for five years, interest
and dividends paid on the deposited securities m u s t have
amounted to not less t h a n 50 per cent in excess of t h e
annual interest on the bonds secured. Not more t h a n 2
per cent of t h e deposits of a savings bank m a y be invested
in bonds of telephone companies. The commissioner's
annual list of securities t h a t are a legal investment m u s t
show those authorized under Sixth.
Seventh.—In t h e stock of New England national banks,
or of Massachusetts trust companies, b u t t h e corporation
m u s t not hold, b o t h as an investment and as security, more
t h a n 20 per cent of its deposits in this sort of stock; nor in
t h e stock of any one national b a n k or trust company more
t h a n 3 per cent of its deposits, nor more t h a n $100,000,
nor more t h a n one-quarter of t h e capital stock of t h e b a n k
or t r u s t company. A savings b a n k m a y deposit not more
t h a n 2I per cent of its deposits in any Massachusetts national bank and in any Massachusetts trust company, b u t
t h e deposit m u s t not exceed $500,000, nor 25 per cent of
t h e capital and surplus of t h e depositary.
Eighth.—In loans not for a longer period t h a n one year,
subject to t h e requirements given below. Not more t h a n
one-third of deposits and income m a y be t h u s invested,




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Banks

nor m a y t h e total liabilities t o a savings bank of a person,
firm, or corporation for money borrowed on personal security, including in firm liabilities those of t h e members,
exceed 5 per cent of deposits and income; these limitations,
except t h e one-year limitation, not t o apply t o loans made
under (2) of (e). These loans m a y be of t h e following
sorts: (a) Notes of three or more responsible Massachusetts
citizens; provided t h a t t h e total liabilities t o a n y savings
bank of a person or firm for money borrowed under this
subdivision, including in firm liabilities those of t h e members, must n o t exceed 1 per cent of t h e deposits, (b)
Notes, with one or more substantial sureties or indorsers,
of a Massachusetts corporation, or of a manufacturing
corporation with a Massachusetts commission house as
surety, or of a n association or corporation a t least half
whose property is located in New England, with a surety
who is a citizen or corporation of Massachusetts, b u t no
loan of this sort m a y be made unless an examination of the
borrowing corporation has been made b y an accountant
approved b y the commissioner, (c) Notes or bonds of gas,
electric light, telephone, or street railway corporations of
Massachusetts t h a t have had annual net earnings for three
years equal t o 4 per cent of their capital, and gross earnings
for one year of $100,000. (d) Bonds or notes issued, assumed, or guaranteed b y railroad corporations complying
with t h e requirements of (b), or (1), (2), (3), and (4) of (e), of
Third. The principal of the securities named in (c) and (d)
must be payable in a time not longer t h a n a year, (e) Notes
of responsible borrowers with a pledge of various collateral,
including (1) mortgages of Massachusetts real estate, if the
note does n o t exceed 60 per cent of t h e value of t h e real
estate, nor 40 per cent if it is unproductive; (2) securities
which are legal investments under Second, Third, Fourth,
or Fifth, a t not more t h a n 90 per cent of their market value;
(3) deposit books of depositors, a t n o t more t h a n 90 per




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cent of the a m o u n t of deposits; (4) railroad stocks which
are legal investments under (a), {b), or (e) of Third, at
n o t more t h a n 80 per cent of their market value; (5)
other stocks and bonds at percentages settled b y t h e
board of investment, subject t o t h e approval of t h e commissioner. (Changes of collateral under (e) m u s t be a p proved b y t h e board of investment—1908, chap. 590, 31.)
Ninth.—A s u m not exceeding t h e g u a r a n t y fund a n d
undivided earnings of the savings bank, nor in any case
exceeding 5 per cent of its deposits, or $200,000, may,
subject to t h e approval of the commissioner, be invested
in suitable real estate for business purposes.
Tenth.—A savings b a n k m a y hold real estate acquired
by foreclosure of mortgages owrned b y it, or by purchase
a t sales m a d e under such mortgages, or upon j u d g m e n t s
for debts due it, or settlements to secure such debts. This
real estate m u s t be sold within five years, and t h e b a n k
m a y t a k e a purchase money mortgage, notwithstanding
t h e provisions of First.
Eleventh.—A savings b a n k m a y hold stocks, bonds,
notes, or other securities acquired in settlements to secure
debts, b u t these securities m u s t be sold in five years
(1908, chap. 590, 68, amd. b y 1909, chap. 491, 8).
VIII.—BRANCHES.

Savings b a n k s m a y not do business at any place other
t h a n their own banking house, except t h a t with t h e permission and under t h e regulation of the commissioner one
or more branches for t h e receipt of deposits m a y be established in the city or town in which the banking house is
located, or in towns not more t h a n 15 miles distant in
which there is no savings b a n k (1908, chap. 590, 36).
IX.—OCCUPATION OF THE SAME BUILDING.

See Banks,




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Banks

X.—UNAUTHORIZED BANKING.

No corporation, person, or firm, except savings banks
and trust companies incorporated under Massachusetts
law (except certain foreign corporations subject t o supervision of t h e commissioner—1907, chap. 533), m a y use a
sign having on it words indicating t h a t t h e office is t h a t of
a savings bank, nor m a y such words b e used on letter
paper, etc. Business appearing t o b e t h a t of a savings
b a n k m a y n o t b e transacted (1908, chap. 590, 16). T h e
penalty for violation is $100 a d a y ; t h e offender m a y b e
enjoined from doing business (1908, chap. 590, 17).
XI.—PENALTIES.

See Banks for penalties for obstructing examinations;
failure t o report or false report; occupation b y a savings
b a n k of offices with another b a n k ; a n d t h e holding of
office in a national b a n k or a t r u s t company b y a savings
b a n k officer (1908, chap. 590, 6, 14, 19, and 20).
Any officer of a savings bank, or other person in charge
of its property, who obstructs examination b y a committee of t h e legislature is punished b y a fine of n o t more
t h a n $10,000 or imprisonment for n o t more t h a n three
years (1908, chap. 590, 21). If t h e clerk of a savings b a n k
neglects t o notify newly elected officers or t o publish t h e
required list of them, or if h e publishes a false list, he is
liable t o a penalty of $50 (1908, chap. 590, 29). T h e treasurer of a savings b a n k who fails t o m a k e a r e t u r n of unclaimed deposits is punished by a fine of $100 (1908, chap.
590, 39). Whoever violates t h e provision forbidding t h e
receipt b y a savings b a n k of a fee for negotiating a loan
from t h e savings bank, other t h a n t h a t which appears on
t h e face of t h e contract of loan, suffers a fine of n o t more
t h a n $1,000, imprisonment for n o t more t h a n one year, or
b o t h (1908, chap. 590, 45). Loss of office is t h e penalty
S- Doc. 353, 61-2




18

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for t h e president, treasurer, member of investment board,
or officer charged with investing funds, who borrows from
the savings b a n k or becomes owner of land mortgaged to
it (1908, chap. 590, 44).

TRUST COMPANIES.
I . — T E R M S OF INCORPORATION.

Trust companies are clearly given banking powers; they
m a y " receive on deposit, storage, or otherwise money
* * * and other property of any kind. " Trust companies receiving such general deposits of money m u s t not
give t h e depositor security (R. L-, chap. 116, 12). Property received in trust is kept separate from t h e general
assets of the company; investments, loans, etc., are distinct
and in a trust department (R. L., chap. 116, 24). The
t r u s t d e p a r t m e n t m a y have a trust guaranty fund accumulated out of profits, invested only in legal trust fund investments (R. L., chap. 116, 25), and pledged for performance
of fiduciary undertakings (R. Iy., chap. 116, 26). This
trust guaranty fund must not be transferred to t h e general
capital while t r u s t obligations are owed; b u t its income
m a y be added to t h e general income of t h e corporation
when it is not needed to discharge fiduciary obligations
(R. L., chap. 116, 27).
The capital of every trust company must be not less t h a n
$200,000 nor more t h a n $1,000,000, except t h a t in a city or
town of not more t h a n 100,000 t h e capital m a y be not less
t h a n $100,000, divided into shares of $100 par value. The
whole capital m u s t be actually paid in before business is
begun, and no share m a y be issued till paid for in cash
(R. L . , c h a p . 116, 5, amd. b y 1907, chap. 487). No shares
m a y be issued tillpaidfor at p a r i n cash (1904, chap. 374,6).
A guaranty fund must be set aside each year of not less
t h a n 10 per cent of net earnings until this fund amounts t o




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— Trust

Comp antes

25 per cent of capital; t h e guaranty fund must be invested
" in the same manner as deposits in savings banks m a y be
invested" (R. L-, chap. 116, 29).
Before they are allowed to begin business t h e incorporators of a trust company must obtain a certificate t h a t
public convenience and advantage will be promoted b y the
establishment of the company. If this is refused t h e
application m a y not be renewed until a year later (1904,
chap. 374, 3). Before beginning fiduciary business the
trust company m u s t receive authority (R. Iy., chap. 116,
20). The issuing of this authorization is at t h e discretion
of t h e board of b a n k incorporation, who also m a k e the
preliminary examination to ascertain t h a t the whole capital has been paid in in cash and t h a t all requirements
have been complied with, before issuing the certificate
authorizing the trust company to begin business (1904,
chap. 374, 6; and 1908, chap. 590, 4, amd. by 1909, chap.
491, 2).
A recent s t a t u t e provides for t h e separation of savings
deposit business in a department of its own. Every trust
company "soliciting or receiving deposits (a) which may
be withdrawn only on presentation of the pass book or
other similar form of receipt which permits successive
deposits or withdrawals to be entered thereon, or (6) which
a t the option of t h e trust company may be withdrawn only
at the expiration of a stated period after notice of intention
to withdraw has been given, or (c) in any other way which
might lead the public to believe t h a t such deposits are
received or invested under t h e same conditions or in the
same manner as deposits in savings b a n k s , " must have a
separate savings department (1908, chap. 520, 1). The
loans and investments of these deposits are governed by
the savings-bank statute (1908, chap. 520, 2). These
deposits and the investments or loans of them m u s t not
be mingled with the general property of t h e trust company




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Commission

or be liable for t h e general obligations of t h e company until
deposits in the savings department have been paid in full
(1908, chap. 520, 3). I n addition to this security, savings
depositors have an equal claim with other creditors upon
t h e property of t h e trust company (1908, chap. 520, 4).
II.—LIABILITIES

AND

D U T I E S OF

STOCKHOLDERS

AND

DIRECTORS.

The stockholders of every trust company are personally
liable for the obligations of t h e corporation to t h e a m o u n t
of their stock a t par in addition to t h e a m o u n t invested in
t h e shares (R. L., chap. 116, 30, amd. b y 1905, chap. 228).
Each director of a trust company must own a t least ten
shares of its stock. A majority of t h e m m u s t be citizens
of Massachusetts and there resident; not more t h a n onethird of t h e directors of one trust company m a y be directors
of another (R. L., chap. 116, 9).
III.—SUPERVISION.

See Banks for the details of t h e make u p of t h e board
of b a n k incorporation, t h e qualifications of t h e b a n k
commissioner, etc. The commissioner, if he thinks a
t r u s t company has violated t h e law, reports t o t h e
attorney - general, who prosecutes. The commissioner
directs unsafe practices to be discontinued, a n d m a y , if
t h e t r u s t company fails t o comply or if he thinks a
trustee or officer of t h e t r u s t company has abused his
trust, etc., either report t o t h e shareholders or, with t h e
consent of t h e treasurer and receiver general, t h e attorneygeneral, and the commissioner of corporations, publish
t h e facts as he thinks public interest requires (1908,
chap. 590, 8). If a t r u s t company on examination
appears insolvent or in a hazardous condition, t h e commissioner must, or in cases of apparent violation of law




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M ass achus etts

— Trust

Comp

antes

or exceeding powers may, t a k e possession and apply for a
receiver (1908, chap. 590, 9). T h e commissioner examines
t h e afifairs of receivers and reports any violation of d u t y
to t h e appointing court (1908, chap. 590, 11). The commissioner m a y prescribe t h e form of keeping books and
accounts of t r u s t companies and t h e extent t o which they
must be audited (1908, chap. 590, 12). T h e b a n k
commissioner has authority t o determine w h a t trust
companies in Boston m a y act as reserve agents for other
t r u s t companies; his consent is necessary to use a reserve
agent as such (1908, chap. 520, 10). H e notifies a t r u s t
company to m a k e good its reserve when it falls below
t h e required amount, and if t h e company fails for sixty
days t o do so he applies to a court for a receiver.
If
t h e reserve of a t r u s t company which has been authorized
to act as reserve agent is less t h a n t h e required amount,
t h e commissioner notifies t h e company t o m a k e t h e reserve
good, a n d if it fails t o do so for t e n days he m a y revoke
its authority t o act as a reserve agent (1908, chap. 520, 11).
Increases in capital stock m u s t be approved b y t h e commissioner (1905, chap. 189; a n d 1908, chap. 590, 5, amd.
by 1909, chap. 491, 3).
The board of b a n k incorporation has authority t o refuse
to allow t h e incorporation of a trust company if not
required b y public convenience, and to refuse t o allow a
t r u s t company t o begin t r u s t business if t h e y t h i n k it
inexpedient (R. I,., chap. 116, 20; 1904, chap. 374, 3 ; and
1908, chap. 590, 4).
REPORTS.
T h e recent savings b a n k act provides t h a t in addition t o
reports required by law t o be made, t r u s t companies m u s t
m a k e such other statements t o t h e commissioner as he
m a y require (1908, chap. 590, 13). Every t r u s t company
m u s t when required b y t h e commissioner, b u t not exceed-




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Commission

ing five times a year, return to the board a report of its condition a t t h e close of business " on said day " (there seems
t o be no day previously specified), detailing t h e following
items: Capital stock; amount of all money and property in
detail, in t h e possession or charge of said corporation as
deposits; a m o u n t of deposits payable on demand or within
ten d a y s ; a m o u n t of trust g u a r a n t y fund; t r u s t funds or
for purposes of investment; n u m b e r of depositors; investments in authorized loans of t h e United States or any of
t h e New England States, counties, cities, or towns; investm e n t s in b a n k stock, railroad stock, and railroad bonds,
stating a m o u n t in each; loans on notes of corporations;
loans on notes of individuals; loans on mortgages of real
estate; cash on h a n d ; rate, amount, and date of dividends
since last r e t u r n ; and such other information as t h e board
of commissioners of savings banks m a y require. This
return must be m a d e within ten days and m u s t be in t h e
form of a trial balance, specifying different kinds of
liabilities and assets in accordance with a blank form
furnished by t h e board. I t is published in a local newspaper (1908, chap. 520, 13; and 1908, chap. 590, 5, amd.
by 1909, chap. 491, 3). Reports are required t o be submitted t o t h e b a n k commissioner within ten days after
t h e examinations by the committee of three stockholders discussed below. This report is m a d e on forms
furnished by t h e commissioner, and contains a s t a t e m e n t
of assets and liabilities, including those of t h e t r u s t
department, together with whatever other information
t h e commissioner requires. I t specifies loans or discounts
wliich t h e committee thinks worthless or doubtful and
loans m a d e on collateral which is of doubtful value or not
readily marketable (1907, chap. 319, 2 and 3). For t a x
reports, see 1908, chapter 520, 12; and 1909, chapter 342, 2.




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— Trust

Companies

The report required to be made by t h e bank commissioner to the legislature is as stated under Banks (1908,
chap. 590, 15).
EXAMINATIONS.

The general rules for examinations are as stated under
Banks. The commissioner or a subordinate, at least annually, and whenever he considers it expedient, visits
every trust company (1908, chap. 590, 5). On application
of five or more officers, trustees, creditors, or depositors to
the commissioner he must make a special examination
(1908, chap. 590, 7). He examines trust companies in the
hands of receivers (1908, chap. 590, 11).
A preliminary examination is m a d e b y t h e board of bank
incorporation to ascertain t h a t t h e capital has been paid
in in cash (1904, chap. 374, 6; and 1908, chap. 590, 4, amd.
b y 1909, chap. 491, 2). The commissioner m a y examine
trust companies as he does savings banks, and m a y employ
an expert for additional examinations of trust companies
t h a t are acting in a fiduciary capacity. H e examines
whenever ordered to do so by a court of competent jurisdiction (R. L., chap. [16, 37; and 1908, chap. 590, 5, amd.
b y 1909, chap. 491, 3).
The stockholders of every trust company elect an examining committee of not less t h a n three stockholders, of
which certain specified managing officers of t h e company
may not be members. This committee, once a year, without notice to t h e officers or directors, makes a thorough examination of assets and liabilities, including those of the
trust department. Within ten days after their examination they report to the bank commissioner as explained
above. If upon receipt of this report, or if upon examination, a further examination or audit of t h e affairs of a trust
company seems necessary, the commissioner m a y cause it
to be made b y an expert (1907, chap. 319, amd. b y 1908,
chap. 520, 14).




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IV.—RESERVE REQUIREMENTS.

Every trust company must have a reserve equal to at
least 15 per cent of its deposits, exclusive of savings deposits and of deposits represented by certificates and not
subject to be withdrawn within thirty days. Every trust
company doing business in Boston must have a reserve
equal to 20 per cent of deposits computed in the same manner (1908, chap. 520, 8). At least two-fifths of this reserve must consist of lawful money of the United States,
gold or silver certificates, or national bank notes. The remainder may consist of balances payable on demand, due
from trust companies in Boston authorized as reserve
agents by the commissioner, or from national banks in
Massachusetts and named cities. A portion not exceeding
one-fifth of the reserve may consist of United States or
Massachusetts bonds. The aggregate amount of lawful
money of the United States, gold and silver certificates,
and national bank notes must equal at least 5 per cent of
all deposits exclusive of those in the savings department
(1908, chap. 520, 9). The commissioner may authorize
any trust company in Boston to act as reserve agent for
trust companies doing business in Massachusetts, but a
trust company must not keep its reserves in such an authorized trust company without obtaining the commissioner's consent. Not less than one-half of the reserve of a
trust company acting as reserve agent must be in lawful
money of the United States, gold certificates, silver certificates, or national bank notes, and the remainder may consist of balances payable on demand, due from trust companies in Boston authorized to act as reserve depositaries,
or from national banks in Massachusetts or in named cities
(1908, chap. 520, 10). While the reserve of a trust company is below the required amount no new loans or investments may be made. The commissioner notifies the com-




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Massachusetts — Trust Companies
pany t o make good its reserve, and if it fails for sixty days
sues for a receiver. When the reserve of a reserve deposit a r y is below, t h e commissioner requires t h a t trust company
to make good its reserve, and if it fails t o do so within ten
days h e revokes its authority t o b e a reserve agent (1908,
chap. 520, 11).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

A trust company m a y loan its capital or general deposits on real property in Massachusetts a n d on personal
security (R. T., chap. 116, 13). No trust company m a y
advance money on notes secured b y mortgage of farms
or agricultural or unimproved land outside of Massachusetts except on land in New England or New York, nor
m a y it invest in or make loans upon t h e securities of a
company dealing in notes secured b y such mortgages
(R. L., chap. 116, 14). No t r u s t company m a y loan or
discount on t h e security of shares of its own stock unless
the security is necessary t o prevent loss on a previous
debt, in which case t h e stock m u s t b e disposed of within
six months (R. L., chap. 116, 33).
The total liabilities of a person, other t h a n cities or
towns, for money borrowed, including in t h e liabilities
of a firm those of its members, t o trust companies with a
capital of $500,000 or more, must never exceed onefifth of t h e surplus and of t h e paid-up capital; a n d t h e
liabilities t o a n y other trust company m u s t n o t exceed
one-fifth of paid-up capital. B u t t h e discount of bills
of exchange drawn in good faith against existing values,
and of commercial paper owned b y t h e person negotiating it, are n o t considered as money borrowed (R. L.,
chap. 116, 34). #
Trust funds are separated from general assets; loans of
them are appropriated t o t h e security of t h e trust deposits (R. L., chap. 116, 24). Loans of savings deposits




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Monetary

Commission

are handled b y the savings department of the t r u s t comp a n y and are appropriated solely to the security and paym e n t of the savings deposits. They must be made in
accordance with t h e restrictions on savings bank loans
(1908, chap. 520, 2 and 3).
See further loan restrictions, under VI.
VI.—INVESTMENTS.

A trust company may hold unincumbered real estate
suitable for its business, to an amount not exceeding
25 per cent of its paid-in capital, and in no case exceeding
$250,000 (R. L., chap. 116, 35).
A trust company may invest its capital and general
deposits in stocks, bonds, or other evidences of indebtedness
of corporations (R. L., chap. 116, 13). A trust company
m a y not invest in t h e securities of a company dealing
in notes secured b y real estate mortgages which would
not be a legal loan for the trust company (R. L., chap.
116, 14). A t r u s t company m a y not be agent to deal in
securities on which t h e company could not lawfully loan,
nor m a y it act as agent to deal in evidences of debts
secured exclusively b y mortgage of real estate (R. L.,
chap. 116, 15). A trust company m a y not invest in its
own shares unless the purchase is necessary t o prevent
loss on a previous debt, in which case t h e stock m u s t be
disposed of within six months (R. L., chap. 116, 33).
There is a separate trust department, the investments
of which are especially appropriated to the security of
t r u s t deposits and are not mingled with the investments
of capital or general assets of t h e company (R. L., chap.
116, 24). The t r u s t guaranty fund may be invested
only in such securities as trust deposits m a y be invested
in (R. L., chap. 116, 25). Trust deposits with a trust
company under order of court m a y be invested only in




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Companies

United States securities, securities of any New England
State, of any New England municipality, of named
States, and of t h e municipalities of t h e named States, or
in stocks of state or national banks of Massachusetts, or
in first mortgage bonds of New England railroads t h a t
have paid dividends, on all their capital for two years, or
in bonds of such a railroad unincumbered b y mortgage,
or in first mortgages on Massachusetts realty, or in securities in which savings banks m a y invest, or in loans upon
notes, with two sureties, of domestic manufacturing corporations or of individuals with pledge of any of t h e securities named, b u t all real estate acquired by judicial process
m u s t be sold at public auction within two years (R. L.,
chap. 116, 17).
If a trust company receives savings deposits, it m u s t keep
them in a savings department, and must invest t h e m
according t o the statutes governing savings bank investments ; they are appropriated for the security of savings
depositors solely (1908, chap. 520, 1, 2, and 3).
VIII.—BRANCHES.

The board of b a n k incorporation may authorize any
trust company to maintain not more t h a n one branch
office, which must be in the city or town in which its main
office is located (1908, chap. 520, 15).
I X . — O C C U P A T I O N OF T H E SAME B U I L D I N G .

See Banks.
X . — U N A U T H O R I Z E D T R U S T COMPANY B U S I N E S S .

No corporation, whether domestic or foreign, and no
person or firm, except savings banks and trust companies
incorporated under Massachusetts law, m a y use a sign,
letter paper, etc., on which appears a name or other words




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Commission

indicating that the business done is that of a savings bank.
See this heading under Savings banks (1908, chap. 590, 16
and 17).
No person, firm, or corporation, except trust companies
incorporated under Massachusetts law, may use the words
"trust company" in his or its name, or advertise or
solicit or receive deposits as a trust company. Whoever
violates this provision forfeits $100 for each offense for
each day (R. L., chap. 116, 3, amd. by 1909, chap. 491, 1).
XI.—PENALTIES.

See this heading under Banks for penalties for obstructing examinations, failing to report, occupation by a savings
bank of offices with a trust company, and violations of the
rule forbidding officers of savings banks to hold office in
trust companies (1908, chap. 590, 6, 14, 19, and 20).




284

MICHIGAN.
The digest for this State is based upon a reprint of the
laws relating to banking compiled under the supervision
of George A. Prescott, secretary of state, published in
1908, and including all legislation through the 1907 session
of the legislature. Legislation by the 1909 session has
been taken from the later reprint, compiled under the
supervision of Frederick C. Martindale, secretary of state,
published in 1909. The general banking law applies for
the most part to both commercial and savings banks,
which may be combined. On this account these two sorts
of institutions are put under one head in the digest. At
the end of each subhead are collected such few provisions
as relate either to banks alone or to savings banks alone.
There is legislation for trust companies, following the banking act for the most part, even to the language, and scarcely
less complete. This has been digested under the heading
"Trust companies." A constitutional provision in Michigan requires that a general banking law be approved by
a majority of voters at a general election (constitution,
Art. XV, sec. 2); it seems that the trust company laws
are not within the constitutional provision, since banking
powers are expressly denied trust companies (6164).
The references in the digest, following those in the
reprints of the secretary of state, are, where they are
simply numbers in parenthesis, to sections in the Compiled
Laws of 1897, the last revision of the Michigan statutes.
Amendments as indicated in the two reprints are noted
in the digest.




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Commission

BANKS AND SAVINGS BANKS.
I . — T E R M S O F INCORPORATION.

Incorporation under the general banking law m a y be
" t o establish offices of discount a n d deposit t o be known
as commercial banks, and also to establish offices of loan
a n d deposit to be known as savings banks, or to establish
b a n k s having departments for b o t h classes of b u s i n e s s / '
All three of these sorts of b a n k s are regulated b y t h e
banking act (6122). T h e capital stock must be a t least
$250,000, except t h a t banks with a capital of not less t h a n
$20,000 m a y be organized in a city or village of not more
t h a n 1,500; with a capital of not less t h a n $25,000 in a
city or village of not more t h a n 5,000; with a capital of
n o t less t h a n $50,000 in a city or village of not more t h a n
20,000; and with a capital of not less t h a n $100,000 in a
city of not less t h a n 110,000. Banks having deposits
exceeding $5,000,000 m u s t have a capital of not less t h a n
$400,000 (6090, amd. b y 1899, act 265). The capital m u s t
be divided into shares of $100 each (6091). At least 50
per cent of t h e capital m u s t be paid in before business is
begun; the remainder m u s t be paid in in installments
of a t least 10 per cent on the whole of the capital, payable
a t t h e end of each m o n t h from t h e time t h e b a n k is authorized to begin business (6094). Any b a n k which combines
t h e business of commercial a n d savings banking m u s t
keep separate books of account, and all transactions
relating to each class of business are governed b y t h e rules
applicable to t h a t sort of banking. Savings investments
m u s t be separated, savings reserves must be separated,
a n d uninvested savings deposits and investments of savings deposits are held solely for the p a y m e n t of savings
depositors (6118, amd. b y 1909, act 193).
Directors m a y declare dividends out of net profits, b u t
before the declaration not less t h a n one-tenth of t h e net




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Banks

profits for t h e preceding dividend period m u s t be carried
t o surplus, until t h e surplus amounts to 20 per cent of
capital (6102).
(For restrictions on banks borrowing, see VI, infra.)
COMMERCIAL BANKS.

T h e salient feature of a commercial b a n k seems to be
t h a t , although it m a y allow interest on accounts or certificates of deposit, all deposits are payable on demand without notice, unless the contract of deposit otherwise provides (6113).
SAVINGS BANKS.

The s t a t u t e distinguishes savings banks b y providing
t h a t they " m a y receive on deposit money offered b y tradesmen, mechanics, laborers, servants, minors, a n d other
persons; and all deposits in said banks m a y be repaid to
t h e depositors, * * * when required at such time or
times and with such interest and under such regulations as
the board of directors of the b a n k from time to time prescribes" (6115).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS AND

DIRECTORS.

Stockholders are individually liable for the benefit of
depositors in their bank to t h e a m o u n t of their stock at
par in addition to the stock (6135). See constitutional
provisions for unlimited liability of officers and stockholders of banks issuing money (constitution, Art. XV,
sec. 3), and of stockholders of all corporations for labor
(constitution, Art. XV, sec. 7).
There m u s t be not less t h a n five directors, each of whom
m u s t own not less than ten shares of stock (6101, amd.
b y 1899, a c t 2 65) • The directors appoint an examining
committee of directors or stockholders, who m u s t examine




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Commission

t h e b a n k every six months and report to the directors, with
a view to ascertaining what assets of the bank are n o t of
t h e value a t which they appear on t h e records (6104, amd.
by 1907, act 65). The directors, or a committee of at
least three of them, must meet monthly t o examine
loans, investments, and other transactions since t h e last
meeting (1909, act 193).
III.—SUPERVISION.

There is a bureau in charge of the execution of laws
relating to banks, trust companies, etc., called t h e s t a t e
banking d e p a r t m e n t (6124). T h e chief officer is t h e commissioner of t h e banking department, whose t e r m of office
is four years and whose salary is $3,500 a year. Neither
t h e commissioner nor his deputy m a y be interested in banking business (6125, amd. by 1909, act 103). No one m a y
be appointed to examine a b a n k in which he is interested
in any way. T h e commissioner and his subordinates m u s t
keep secret information obtained in the course of examination except so far as public d u t y requires t h e m to report
(6129, amd. b y 1905, act 88).
The commissioner grants a certificate of authority t o
begin business, which he m a y withhold, on consultation
with t h e attorney-general, if he has reason to believe t h a t
the organization is for other t h a n legitimate purposes
(6096). H e approves of reductions in capital stock
(6099). H e approves of cities in which banks m a y be
used as reserve depositaries (6113; and 6116, amd. b y
1905, act 262, and by 1907, act 322). When it appears
t h a t a bank is borrowing habitually for t h e purpose of
reloaning, the commissioner requires t h e bank to p a y off
t h e borrowed money (6121, amd. by 1905, act 117). H e
m a y call stockholders' meetings of any b a n k (6133).
Voluntary liquidations are reported to him (6142) a n d




288

Michigan — State Banks and Savings

Banks

he approves of consolidations (6143). H e has supervision
over extending the corporate existence of banks (1899,
act 143).
With the concurrence of the attorney-general, t h e commissioner institutes proceedings to wind up the affairs of
a bank, under t h e following circumstances: When a bank's
reserve has fallen below the required a m o u n t and for
thirty days after notice from the commissioner the bank
has failed to m a k e the reserve good (6114; and 6116, amd.
by 1905, act 262, and b y 1907, act 322); when b y cancellation of unpaid shares the capital is reduced below the
minimum and is not increased to the required amount
within thirty days (6095); and when the directors violate
or allow a violation of t h e banking law and after warning
from t h e commissioner fail to make good all damages t h a t
have resulted (6109). If t h e commissioner is satisfied
t h a t t h e capital of a bank is reduced below t h e legal
requirement, and the impairment is not made good as
required by him, or if he is satisfied t h a t a bank has
refused to pay its deposits, or if it has violated t h e law
or is conducting its business in an unsafe or unauthorized
way, or if it refuses to submit to examination, or if from
an examination or report he concludes t h a t the bank is
in an unsound or unsafe condition, then the commissioner
communicates with the attorney-general and institutes
through him receivership proceedings. The court appoints
the banking commissioner or a subordinate or some other
person as receiver. Pending t h e appointment t h e commissioner m a y take possession of t h e ' b a n k (6144, amd.
by 1909, act 103). The stockholders of t h e bank m a y
p u t it in condition to resume business, in which case the
court discharges the receiver (1909, act 193).

S. Doc. 353, 61-2




19

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Monetary

Commission

REPORTS.

Every bank makes to the commissioner not less t h a n
four reports a year, at times and according to forms he prescribes. They show resources and liabilities at t h e close
of business of a past day specified by the commissioner,
and must be transmitted to him within five days after the
receipt of his request. They are published in a local newspaper. The commissioner m a y call for special reports
when he thinks t h e m necessary. Every bank m u s t also
report within ten days after declaring a dividend t h e
a m o u n t of the dividend, the a m o u n t carried to surplus,
and the a m o u n t of. excess net earnings (6110). After the
examining committee of the directors of every b a n k have
m a d e their semiannual examination and reported t o t h e
directors, a copy of t h e record is sent to t h e commissioner;
once a year a list of stockholders is sent him (6104, amd.
b y 1907, act 65). There is a provision not p a r t of the
banking act t h a t ''every banking * * * or other
incorporated company " must file annually with t h e secretary of state a list of the number of shares issued, with
the names and addresses of the owners (11364, amd. b y
1903, act 35). Receivers m u s t report to the commissioner
all their proceedings (6144, amd. by 1909, act 103).
A provision not p a r t of the banking act requires t h a t
every third year every person, firm, or corporation who is
engaged " i n the t r u s t business or the business of banking
within this State, and as a p a r t of such business, receive
in any manner whatever, moneys, or securities of persons
upon deposit,'' must report to t h e commissioner deposits
where the persons making t h e m have not dealt with t h e m
for three years and the depositary has good reason to believe t h a t the depositor is dead. The report includes n a m e
of depositor, sum deposited, date and form of deposit,




290

Michigan — State Banks and Savings Banks
interest, and amount, with the total of deposits of this
sort (1218).
At the end of every year the commissioner reports to
the governor showing a summary of the condition of every
bank from which reports have been received during the
year, with an abstract of total capital, liabilities, resources,
and lawful money held, and such other information as
the commissioner thinks is required; a statement of the
banks and corporations whose business has been closed,
with details; and details of t h e conduct of t h e banking
department (6132).
EXAMINATIONS.
There is a preliminary examination to ascertain the
a m o u n t of money paid in on capital, and performance of
other preliminaries (6096). The commissioner or a subordinate examines, twice or oftener each year and whenever required by the directors, the cash, securities, books,
condition, etc., of every b a n k (6128, amd. by 1903, act
107, and 1905, act 88). He causes a special examination
to be m a d e before allowing a bank to extend its corporate
existence (1899, a c t J 43)- An examining committee of
directors or stockholders m a k e an examination a t least
once every six months in order to report to the directors
assets which are not of the value at which they appear
on the books (6104, amd. by 1907, act 65).
IV.—RESERVE REQUIREMENTS.

COMMERCIAL BANKS.
Every commercial bank must keep on hand a t least 15
per cent of its total deposits, and every commercial b a n k
in a city of over 100,000 20 per cent of its total deposits, of
which reserve one-half m u s t be in lawful money, and onehalf m a y be in deposits payable on demand in banks in




291

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Mon

etary

Commission

cities approved by the commissioner as reserve cities
(6113). Whenever the reserve of any commercial bank
falls below t h e requirement t h e b a n k must not increase its
liabilities by making new loans or discounts except by
buying sight exchange (6114).
SAVINGS BANKS.
Every savings bank must keep on hand at least 15 per
cent of its total deposits, of which reserve one-third m u s t
be in lawful money, and the balance on deposit, payable on
demand, with banks or trust companies in cities approved
by t h e commissioners as reserve cities, or invested in
United States bonds (6116, amd. by 1905, act 262, and by
1907, act 322).
V.—DISCOUNT,

L O A N , AND D E P O S I T R E S T R I C T I O N S .

The total liabilities to any bank of any person, firm, or
corporation for moneys advanced, including in firm or
corporation liabilities those of the members, must not
exceed one-tenth of the capital and surplus of t h e bank,
b u t the discount of bills of exchange drawn in good faith
against existing values and t h e discount of paper owned by
the person negotiating it are not considered as money borrowed. The foregoing limitations, moreover, do not apply
to loans on real estate or other authorized collateral. The
directors, by a two-thirds vote, m a y allow an increase in t h e
liabilities to the bank of any person, firm, or corporation,
to a sum not exceeding one-fifth of capital and surplus.
Before any b a n k loans any of its funds to its officers or
employees the directors must approve ( 6 i 4 i , a m d . by 1899,
act 265, 1905, act 262, and 1907, act 322). No b a n k m a y
take as security a loan upon any part of its capital stock.
The same security in kind and amount must be required
of stockholders and of persons not stockholders (6090,
amd. by 1899, act 265).




292

Michigan — State Banks and Savings Banks
No b a n k m a y give a preference to a depositor or creditor b y pledging t h e assets of the b a n k as collateral, b u t a
b a n k m a y borrow for temporary purposes and m a y pledge
assets not more t h a n 50 per cent over the a m o u n t borrowed
as collateral. When it appears t h a t a bank is borrowing
habitually to reloan, the commissioner m a y require the
b a n k to pay off the borrowed money. These provisions
do not prevent a b a n k from rediscounting and indorsing
its notes. No b a n k m a y issue its certificate of deposit
for t h e purpose of borrowing money. No bank m a y make
partial payments upon certificates of deposit (6121, amd.
by 1905, act 117).
(Incidental loan restrictions appear under VI, infra.)
COMMERCIAL BANKS.
No commerical bank m a y lend to exceed 50 per cent of
its capital upon mortgage or any other form of real-estate
security, ' ' a n d then only upon t h e adoption of a resolution by a two-thirds vote of the board of directors stating
to what extent its officers may loan on real estate,
* * * except to secure a debt previously contracted in
good faith on personal security deemed at the time adequate to secure such l o a n " (6112). Commercial banks
may invest their capital and deposits in negotiable or
commercial paper or loans on personal securities (6113).
SAVINGS BANKS.
Savings banks m a y issue time and other certificates of
deposit (6117).
VI.—INVESTMENTS .

A bank may hold real estate only for the following purposes : Such as is necessary for the convenient transaction
of its business, including with its banking office other
rented apartments, b u t this investment must not exceed




293

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Monetary

Commission

50 per cent of paid-in capital; such as is conveyed to the
b a n k in satisfaction of previous debts; and such as it purchases a t judicial sales under securities held b y it, b u t
the b a n k m u s t not bid a larger a m o u n t t h a n will satisfy
debt and costs. The last two sorts of real estate m u s t be
sold within thirty days after the expiration of five years
(6100).
No bank m a y hold any portion of its own capital unless
t h e purchase is necessary to prevent loss on a previous
debt, in which case the stock m u s t be sold within six
months if it will bring what it cost; and if not sold within
a year at t h e best price obtainable, then it must be canceled (6090, amd. b y 1899, act 265).
Not more t h a n one-fourth of t h e assets of any b a n k
m a y be invested in steam-railroad bonds; not more t h a n
one-tenth in t h e bonds of any one railroad corporation
described in (c) or (d) of the next paragraph; not more
t h a n one-twentieth in the bonds of any corporation described in (<?), (/), or (g) of the next paragraph, and not
more t h a n one-tenth loaned to any one person, firm, or
corporation on pledge of collateral described in (h) of the
next paragraph (6141, amd. by 1899, a c ^ 2 ^ 5 ; 1905, act
262, and 1907, act 322).
SAVINGS BANKS.
After a savings b a n k has set aside its 15 per cent reserve, three-fifths of t h e remainder of savings deposits
m u s t be invested as follows: (a) In bonds of t h e United
States, or of any State or Territory which has not for ten
years failed to pay debt or interest; (6) in bonds of any
municipality in the United States, if t h e total debt of t h e
municipality does not exceed 5 per cent of its assessed
valuation, and b y a two-thirds vote of directors municipal bonds m a y be purchased if t h e total liabilities do
not exceed 10 per cent of assessed valuation; (c) in first-




294

Michigan — State Banks and Savings Banks
mortgage bonds of any steam railroad of any State, if the
company has for five years paid 4 per cent dividends on
its whole capital stock and has not defaulted for the same
time in payment of principal or interest of mortgage debt
or bonds guaranteed; (d) in first-mortgage bonds of railroads whose lines are controlled by a railroad company specified in (c), if the controlling company guarantees principal and interest of the bonds; (e) in mortgage bonds of
any steam railroad of any State if they have been issued
to retire prior mortgages and to provide for improvements,
provided the company in question has paid 4 per cent
dividends on its whole capital for three years, has a capital of at least one-third the par value of the bonded
indebtedness, and has not for three years defaulted on
principal or interest of mortgage debt or of bonds guaranteed—bonds under (e) must be approved by the securities commission; (/) in first mortgage bonds of any
electric railroad, street railway, gas or electric light or
power company organized under Michigan law, if the company has for five years paid 4 per cent dividends on its
whole capital, and has not during the same period defaulted in payment of principal or interest of mortgage
debt or of bonds guaranteed; companies in this class
which have not yet been operating five years may satisfy
the requirements otherwise—bonds under (/) must be approved by the securities commission; (g) in first-mortgage
bonds of steamship companies if the mortgage, entailing
liability not in excess of one-half the cost of the property,
is on steel steamships of certain tonnage on the Great
Lakes; the mortgage must provide for the retirement of
10 per cent of the bonds annually, and certain insurance
requirements must be complied with, etc.—bonds under
(g) must be approved by the securities commission; (h)
in loans secured by any of the above securities; (i) in




295

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Monetary

Commission

loans upon notes or bonds secured b y mortgage of unincumbered real estate worth double t h e amount loaned.
The remainder of the deposits—i. e., two-fifths of those not
held in reserve funds—may be invested in notes, bills, etc.,
secured b y deposit with the bank or with a deposit company, of collateral consisting of personal property or securities of known marketable value worth 10 per cent more t h a n
t h e a m o u n t of t h e loan and interest; or m a y be deposited in
a b a n k or t r u s t company in cities in Michigan or elsewhere,
approved by t h e commissioner as reserve cities. Also, a
portion of the remainder, not exceeding t h e capital and
additional stockholders' liability, m a y be invested in paper
approved b y t h e directors. The deposits in any one b a n k
must not exceed 10 per cent of t h e total deposits, capital,
and surplus of t h e depositing b a n k (6116, amd. b y 1905,
act 262, and 1907, act 322). The securities commission
t h a t passes upon t h e securities in (e), (/), (9), and (Ji),
above, consists o f ' t h e commissioner, t h e attorney-general,
and t h e S t a t e treasurer. When an issue of bonds of the
classes in (e) and (/) are presented to t h e commission, they
examine the condition of the issuing corporation, comparing the issue with the valuation of t h e corporation's property. The securities commission keeps a record of investments which it authorizes banks to make (1905, act 262).
VII.—OVERDRAFTS.

T h e only reference t o overdrafts is in t h e section which
provides t h a t an overdraft of more t h a n ninety days
standing shall not be allowed as an asset of a b a n k (6121,
amd. by 1905, act 117).
VIII.—BRANCHES.

The constitution gives the legislative power, b y a twothirds vote to ' ' c r e a t e a single b a n k with b r a n c h e s "
(constitution, Act* X V , sec. 1). This clearly is not con-




296

Michigan — State Banks and Savings Banks
cerned with branches of regular state banks or savings
banks.
X.—UNAUTHORIZED BANKING.

No incorporated company without express authorization of law m a y be interested in receiving deposits, making
discounts, etc.; any director, officer, or agent of a company
who violates this provision forfeits $1,000 (11351). The
act relative to bankers and banking firms forbids their
advertising, etc., in such a way as to represent themselves
as " a n organized b a n k , " though they m a y employ t h e
words " b a n k " and " b a n k i n g office" in connection with
the individual or firm name. Violation of the section is
a misdemeanor, punishable by fine of not more t h a n $200
or imprisonment for not more t h a n six months'(5275).
XI.—PENALTIES.

Every b a n k which fails to report is subject to a penalty
of $100 a day during t h e delay (6111). Failure to report
unclaimed deposits after being required to do so b y the
commissioner of banking entails a penalty of $300 for each
failure, and an additional $10 a day while the report
remains unfiled (1219). Any company which fails to
report to the secretary of state annually a list of stockholders is liable to a fine of not more t h a n $500 (11365).
The officers of a b a n k whose d u t y it is to keep a book with
names and residences of stockholders, stock transfers, etc.,
forfeit $100 for every day's neglect if they fail to keep t h e
book, and $50 for a refusal to exhibit it to one rightfully
demanding inspection (6134).
Every officer, director, %or employee who embezzles,
makes a false entry, reports falsely, with intent to deceive
an examining officer, etc., is imprisoned for not longer
t h a n twenty years (6147). Any officer or employee who
certifies to a check for which there are not funds to t h e




297

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Monetary

Commission

credit of the drawer, any director or officer who receives
a deposit knowing his b a n k to be insolvent, and any officer
or employee who knowingly assists in a violation of t h e
banking act is punished by imprisonment for not longer
t h a n five years, fine of not more t h a n $1,000, or both
(6108, 6103, and 6107, amd. b y 1899, a c t 265).
Any b a n k combining commercial and savings banking
which does not keep separate accounts, separate investments, etc., suffers a penalty of $50 for each offense (1909,
act 193).
Any person who: First, knowingly makes a false statem e n t in writing t o a person, firm, or corporation engaged
in banking or other business, respecting his own financial
condition or t h a t of a firm or corporation with which he is
connected, for the purpose of procuring a loan or credit
from t h e person, firm, or corporation to whom the false
statement is m a d e ; or, second, having made, or knowing
t h a t another has made, a false statement in writing to a
person, firm, or corporation engaged in banking or other
business, respecting his own financial condition or t h a t of
a firm or corporation with which he is connected, afterwards procures a loan or credit on the faith of t h e statement, knowing at the time t h a t the statement was false;
or, third, delivers to a note broker a statement in writing,
knowing it to be false, respecting his financial condition or
t h a t of a firm or corporation with which he is connected,
for t h e purpose of using the statement to further t h e sale,
pledge, or negotiation of commercial paper, made or
indorsed, etc., by him or his firm or corporation; or, fourth,
having previously delivered, or knowing t h a t another has
previously delivered, to a note broker a statement in writing
with respect to his own financial condition or t h a t of a
firm or corporation with which he is connected, afterwards
delivers to the broker for t h e purpose of sale, pledge, or
negotiation, on the faith of the statement, any commercial




298

Michigan

— Trust

Companies

paper made or indorsed, etc., by him or his firm or corporation, knowing t h a t t h e statement is false—is guilty
of a misdemeanor, punishable by fine of not more t h a n
$500 for each offense, or imprisonment for not longer t h a n
six months, or both fine and imprisonment (1909, act 25).
Whoever willfully makes a false statement in writing of his
property valuation or his indebtedness, to obtain credit,
is guilty of a felony, punishable by imprisonment for not
longer t h a n one year and fine not exceeding $1,000 (1909,
act 85). Any person who willfully and maliciously makes
a statement derogatory to the financial condition of a bank,
savings bank, or trust company doing business in Michigan,
or who aids in the circulation of such a statement, or rumor,
is guilty of a felony, punishable by fine of not more t h a n
$5,000, or b y imprisonment for not longer t h a n five years,
or both (1909, act 273).

TRUST COMPANIES.
I . — T E R M S OF INCORPORATION.

The section of the chapter on trust, deposit, and security companies which enumerates t h e powers of such companies provides t h a t '' nothing herein contained shall be
construed as giving the right to issue bills to circulate as
money, or b u y or sell b a n k exchange, or do a general banking business" (6164). Note t h a t deposits of savings
b a n k reserves m a y be m a d e " in any national bank, trust
company, or b a n k in cities in this or any other State,
approved b y t h e commissioner," etc. (6116, amd. b y 1905,
act 262, and 1907, act 322). Trust companies, moreover,
m a y keep their reserves " i n any b a n k or trust compUny
approved b y t h e commissioner" (6165).
The capital stock of a trust, deposit, and security company m u s t be a t least $300,000 and not more t h a n
$5,000,000, except t h a t in cities of less t h a n 100,000 it




299

National

M o n et ar y

Commission

m u s t be not less t h a n $150,000. Fifty per cent of t h e
capital must be paid in in cash before business is begun,
a n d t h e rest within six months thereafter (6157). Shares
m u s t be of $100 each (6158).
Dividends m a y be declared out of net profits, b u t before
the declaration not less t h a n one-tenth of the net profits
for the preceding dividend period must be carried to surplus until it a m o u n t s to 20 per cent of the capital (6162).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

Stockholders are individually liable for all obligations
of the corporation to the extent of the amount of their
stock at par in addition to the amount invested in t h e
shares (6169).
There must be not fewer t h a n seven directors, each
the owner of at least ten shares of stock (6162).
III.—SUPERVISION.

See I I I under Banks and Savings banks for provi^ sions dealing with the commissioner, his qualifications,
salary, report to governor, etc. The trust company
act provides t h a t all trust, deposit, and security companies are subject to the inspection and supervision of
t h e commissioner of the banking department (6172).
I t provides for secrecy on the p a r t of him and his subordinates and forbids examination by anyone interested
in the trust company examined (6174). I t gives him
power to call stockholders' meetings of t r u s t companies
(6177). I t provides t h a t he is to be notified of volunt a r y dissolutions (6182) and must approve of consolidations (6183), and t h a t he is to designate banks and trust
companies which may act as depositaries of trust company reserves (6165). I t gives him power to authorize




300

Michigan

— Trust

Companies

trust companies to begin business (6157). The misconduct upon which receivership proceedings may be based
is similar to that in the banking act; if the directors
allow a violation of the trust company act and after
warning from the commissioner fail to make good damages which result (6162), or if an officer refuses to allow
examination (6175), or if it appears from a report, or
the commissioner has reason to believe, that capital is
impaired or reduced, which deficiency the trust company
fails to make good on ninety days' notice (6176), or if
the commissioner is satisfied that a trust company has
refused to pay its obligations or has become insolvent, or
that its capital has become impaired, or that it has violated the provisions of the trust company law, he proceeds with the approval of the attorney-general for a
receiver (6184).
Every trust company deposits with the state treasurer
not less than 50 per cent of the amount of its capital, nor
more than $200,000 in bonds and mortgages of certain
sorts, to be held by the state treasurer as security for
depositors and creditors (6157).
REPORTS.

Every trust company makes to the commissioner not
fewer than four reports each year at such time and in
such form as the commissioner prescribes. The reports
exhibit resources and liabilities of the corporation at the
close of business on a past day specified by the commissioner. They are transmitted to him within five days
after the receipt of his request and are published in a
local newspaper. The commissioner may call for special
reports whenever they are necessary. In addition each
trust company must report to the commissioner within
ten days after declaring any dividend the amount of the




301

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M on et ary

Commission

dividend, the a m o u n t carried to surplus, and t h e amount of
excess net earnings (6170).
Receivers report all their acts to the commissioner
(6184). (See Banks and Savings banks for t h e list
of stockholders required to be sent every year to t h e
secretary of state (11364, etc.) and the report of unclaimed deposits (1218).
EXAMINATIONS.

The commissioner or a subordinate examines once
every year, and when requested by the directors, t h e cash,
bills, securities, books, condition, etc., of every t r u s t
company, t o determine among other things whether t h e
company transacts its business at the place designated
in its articles of incorporation and whether it complies
with law (6173).
IV.—RESERVE

REQUIREMENTS.

Every trust company must keep on hand funds to an
a m o u n t equal at least to 20 per cent of its matured obligations and money due and payable, three-fourths of which
reserve m a y be kept in any b a n k or trust company approved b y t h e commissioner of the banking department
(6165).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

Trust companies may "loan money upon real estate
and collateral security" (6164).
VI.—INVESTMENTS.

Any trust company may hold personalty which is necessary to carry on its business, or which it is necessary to
acquire in the enforcement of claims, etc.; also real estate,
b u t only for the following purposes: Such as is necessary




302

Michigan

—

Trust

Companies

for the convenient transaction of its business, including
with its office other apartments in the same building
which may be rented, but this investment must not exceed 50 per cent of its paid in capital and surplus; such
as is conveyed to the company in satisfaction of previous
debts; and such as it purchases at judicial sales under
liens held by it, but it must not bid more than is necessary to satisfy debt and costs. Real estate of the second
and third sorts may not be reckoned as an asset for
longer than five years. Real estate may, of course, be
held in trust (6165).
The capital which is required to b.e deposited in the
state treasury must be invested in bonds secured by
mortgages, or notes and mortgages on unincumbered real
estate in Michigan, worth double the amount secured, or
in securities of the United States, or of any State that has
not defaulted on principal or interest in ten years, or of
any municipality in Michigan or in any other State. The
balance of the capital stock, together with trust funds,
may be invested in or loaned on securities of designated
sorts, or whatever real or personal securities the directors
think proper (6166).
XI.—PENALTIES.

A trust company which fails to report is subject to a
penalty of $100 a day (6171). See Banks and Savings banks for the penalties for failure to send annually
a list of stockholders to the secretary of state and for
failure to report unclaimed deposits. If the officer of a
trust company whose duty it is to keep a book for names
of stockholders, transfers of stock, etc., fails to keep the
book he is liable to a penalty of $100 for every day's
neglect, and if he refuses to exhibit the book to a person
rightfully demanding inspection he is subject to a penalty
of $50 (6178). See also the last paragraph under XI in




3<">3

National

Monetary

Commission

Banks and Savings banks, for 1909 statutes which provide penalties for making various false statements to
procure credit, circulating rumors derogatory to a trust
company's credit, etc.
Every officer, director, or employee who embezzles or
commits various frauds, including false entries or reports
to deceive an examining officer, is imprisoned for not
longer than twenty years (6187). The directors and
officers of a trust company who receive money or property knowing the corporation is insolvent are guilty of
a misdemeanor punishable by fine of not more than
$1,000, imprisonment for not longer than a year, or both.
Officers or employees who assist in the violation of any
provision of the trust company act are guilty of a misdemeanor punishable by a fine of not more than $1,000,
or imprisonment for not'longer than one year (6162).




304

MINNESOTA.
The Revised Laws of Minnesota, including all statutes
enacted prior to the session of 1905, contain a division
dealing with "Financial corporations." This in turn is
divided into "general provisions" (sees. 2967-2982),
" b a n k s " (sees. 2983-3008), "savings banks" (sees. 30093032), "trust companies" (sees. 3033-3047), "local building and loan associations" (sees. 3048-3058), and "general building and loan associations" (sees. 3059-3067).
The digest, which follows this arrangement of the statute,
is confused by the necessity of inserting important statutes,
chiefly of 1909, which seem for the most part properly
under "General provisious," and leave it doubtful just
which of the old sections they repeal. One of the 1909 statutes creates the office of superintendent of banks, who takes
over the work formerly in the hands of the public examiner; but since the statutes all read " public examiner,"
they are so digested, leaving it for the reader to note that
the new official is now substituted. Under heading " General provisions " are inserted such parts of the statute on
financial corporations and such other provisions of the
Minnesota statutes as apply generally to all three kinds of
banking institutions. Under '' B anks," " Savings banks,''
and " Trust companies," respectively, are inserted the provisions applicable to each class. Where the references
are simply numbers in parenthesis, they are to sections in
the Revised Laws of 1905. Other references are to the
later statutes by year and chapter; they have been examined through the laws of 1909.
S. Doc. 3 53, 61-2




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GENERAL PROVISIONS.
II.—LIABILITIES AND DUTIES OF DIRECTORS.

There must be at least three directors, who m u s t be
stockholders (2858).
III.—SUPERVISION.

Two late statutes alter the system of b a n k supervision
materially; one, chapter 201 of 1909, creates a department of banking in charge of a superintendent of banks,
provides for a system of examination, etc., and t h e other,
chapter 179 of 1909, provides for proceedings against delinquent corporations and for the liquidation of their
assets.
The d e p a r t m e n t of banking has charge of the execution
of all laws relating to banks, savings banks, trust companies, building and loan associations, and other financial
corporations chartered under the laws of Minnesota; t h e
chief officer of the department is the superintendent of
banks (1909, chap. 201, 1). The superintendent, appointed b y the governor for a term of three years, must be
a practical banker of not less t h a n five years' active experience. H e m u s t not, during the term of his office, hold
any other public office, nor be a stockholder, officer, employee, etc., of a n y financial corporation within or outside
of Minnesota (1909, chap. 201, 2). H e is vested with all
of t h e authority and takes over all of the duties formerly
in the hands of t h e public examiner with respect t o banks,
savings banks, trust companies, building and loan associations, and other financial corporations (1909, chap. 201,
4 and 5). He m a y appoint eight examiners and certain
other employees; t h e examiners must have had a t least
three years' active experience in the banking business.
No examiner m a y examine any corporation in which he
has a direct or indirect interest (1909, chap. 201, 8). T h e




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— General

Provisions

State is divided into eight districts for examination, to
each of which an examiner is appointed (1909, chap. 201, 9).
The superintendent's salary is $5,000 a year (1909, chap.
201, 11).

The public examiner (whose duties have now devolved
upon t h e superintendent of banks—1909, chap. 201, 4)
may, under certain circumstances, take possession of the
property and business of a bank, savings bank, or trust
company and hold possession until the corporation resumes
business or is finally liquidated. The circumstances under
which he m a y so act are the following: Whenever it appears
to him t h a t a b a n k has violated its charter or any statute,
or is conducting its business in an unsafe or unauthorized
manner, or t h a t its capital is impaired; whenever it refuses
to submit to examination or suspends payment, or furnishes reason for the examiner to conclude t h a t it is in an
unsound or unsafe condition to transact its business, or
t h a t it is unsafe and inexpedient for it to continue business;
and whenever it fails to observe a proper order of the
examiner. This s t a t u t e provides elaborately for the
liquidation by the examiner of such delinquent banks, the
proof of claims against their assets, the distribution of their
funds to depositors, creditors, and stockholders, etc. (1909,
chap. 179).
Chapter 201 of 1909 provides for the repeal of all laws
inconsistent with it; there is no repealer at all in chapter
179. The digest accordingly includes in the paragraph
below and in certain paragraphs in I I I , under Banks,
under Savings banks, and under Trust companies, provisions of t h e Revised Laws and of later statutes which are,
in all probability, repealed by the 1909 legislation. I t is to
be borne in mind also t h a t chapter 201 transfers from the
public examiner to the superintendent of banks all powers
and duties with respect to banks, savings banks, and trust
companies; t h e examiner's name is used in the digest




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because it so appears in the statutes, even those of 1909,
except chapter 201.
When the examiner is of opinion that an examined corporation may not operate further without danger to public
interests, he takes possession of its property and reports
to the governor for appropriate action (2968). He supervises voluntary liquidations (2969, 2970, and 2971).
Whenever any banking corporation becomes insolvent,
fails to pay its debts, or violates any provision of law, it
may be enjoined by the court from transacting further
business (3179). In certain cases the court may appoint
a receiver (3180).
The examiner, before granting a certificate to an incorporating banking institution, must be satisfied that the corporation has been organized for legitimate purposes under
conditions to merit public confidence, and that it has complied with law (2974).
REPORTS.
The eight examiners appointed under the statute of
1909 report to the superintendent immediately after having examined the condition of any institution, making such
recommendations as they deem advisable (1909, chap. 201,
10). The superintendent of banks reports annually to the
governor touching his official acts, with abstracts of the
condition of the corporations to which his duties relate,
making whatever recommendations he thinks proper; this
report he must distribute to the corporations under his
charge (1909, chap. 201, 7).
The examiner under the old statute reported to the
governor biennially, giving an abstract of the work of
his department, and the condition of the corporations to
which his duties related; he might make whatever recommedations he thought proper (1907, chap. 128).
After making the examination discussed below, the pub-




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ot a — General

Provisions

lie examiner is required, if the provision of the Revised
Laws is still in force, to report promptly the condition of the examined corporation to the governor, especially with regard to infringements of law. This report
the governor may publish (1584).
EXAMINATIONS.

Under the statute of 1909 the superintendent, through
his examiners, visits, at least twice each year, every state
bank, savings bank, and trust company, inspecting and
verifying its assets and liabilities thoroughly enough
to ascertain if its assets are correctly carried on its books;
he investigates the conduct of these corporations and
their systems of accounting to determine whether they
accord with law and soufid banking principles (1909,
chap. 201, 4). The older provisions of the Revised Laws,
given in the following paragraph, seem clearly overridden
by the foregoing.
At least once a year the public examiner was, under
the provisions of the Revised Laws, required to visit
all banking corporations, to inspect and verify their
assets and securities, assure himself of the validity of
their mortgages, and ascertain whether their transactions
were legitimate (1584). The examinations might be
as much more frequent than annual as the examiner
thought necessary. Without previous notice he or his
deputy visited and examined the business and offices
of each corporation; ascertained its financial condition
and its ability to perform its functions, with special reference to any violations of law (2968).
VII.—OVERDRAFTS.

There is evidently no general objection to overdrafts,
for they are mentioned as a possible liability of the director
of a trust company to his corporation (3045).




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XL—PENALTIES.

Every person who fails to obey an order of t h e superintendent of banks or withholds any information called
for by him for purposes of examination, or who willfully
obstructs or misleads him, or swears falsely, is guilty of
a felony punishable by fine of at least $1,000, or imprisonm e n t for a t least one year (1909, chap 201, 6).
Any person who (1) makes a false statement to a bank,
savings bank, or trust company respecting his financial
condition or t h a t of another, for the purpose of procuring a loan from the corporation to which t h e statem e n t is made; or (2) having previously made or having
knowledge t h a t another has made a statement to a bank,
savings bank, or trust company respecting his or another's
financial condition, afterwards on the faith of t h e statem e n t procures from the bank, savings bank, or trust
company a loan, knowing t h a t the statement is false;
or (3) delivers to a note broker for the sale or negotiation
of commercial paper to a bank, savings bank, or trust
company, a false statement respecting his own or another's financial condition for the purpose of having
t h e statement used to further the sale, pledge, or negotiation of the commercial paper; or (4) having previously
delivered or knowing t h a t another has previously delivered to a note broker for the sale or negotiation of
commercial paper a statement respecting his own or
another's financial condition, afterwards delivers to the
note broker for the purpose of sale, pledge, or negotiation
on the faith of the statement any commercial paper,
knowing t h a t the statement is false with respect to his
own or another's financial condition, is guilty of a gross
misdemeanor punishable by a fine not exceeding $1,000,
or imprisonment not exceeding five years, or b o t h
(1909, chap. 431).




310

Minnesota

— State

Banks

Corporations failing to report to the public examiner
within ten days after the proper time forfeit $100 per day
(2979). Persons who refuse t o testify before t h e examiner
or who obstruct or mislead him are punished b y a fine of
$1,000 or imprisonment for one year (1587).
There is a general provision making it a felony for an
officer or employee of a banking corporation to violate t h e
provisions of t h e statutes (2981). I t is also a felony for
officers, directors, and employees to receive deposits in an
insolvent bank, punishable b y imprisonment for not less
t h a n one or more t h a n ten years or by fine of not less t h a n
$500 nor more t h a n $10,000 (5118).

BANKS.
I . — T E R M S OF INCORPORATION.

The capital of every bank of discount and deposit m u s t
be at least $10,000 in a municipality of not over 1,000 population; at least $15,000 in one of over 1,000 and not over
1,500; a t least $20,000 in one of over 1,500 and not over
2,000; and at least $25,000 in one over 2,000. The capital
m u s t be paid in full in cash (2983); when the b a n k presents its certificate of incorporation to the examiner it
must present also the certificate of a solvent b a n k of t h e
deposit in t h a t b a n k to the credit of the proposed b a n k of
an a m o u n t equal to its capital stock (2973.)
At t h e end of each dividend period one-fifth of net
profits must be set aside before declaring a dividend,
until t h e surplus equals one-fifth of the capital (2987).
Capital m u s t never be withdrawn in dividends or otherwise except according to the legal mode of reducing it
(2997).
A bank may conduct a savings department under t h e
supervision of the state examiner (1909, chap. 178).




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Monetary

Commission

II.—LIABILITIES AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

Stockholders in banks of discount and deposit are individually liable for the debts of the bank in an amount
equal to the amount of stock owned by them. Even after
stock has been transferred, this liability continues to rest
upon the transferrer for a year (1907, chap. 137).
Directors of a bank whose capital is not over $15,000
must each own $300 of stock; directors in banks with a
capital exceeding that sum, at least $500 (2986).
III.—SUPERVISION.

A statute of 1909, digested under General Provisions,
provides for dissolution proceedings. The sections given
in the next paragraph, though not expressly repealed,
seem in part inconsistent with the new act.
When a bank is about to become insolvent its managing
officers must report that fact to the examiner. If the
latter is satisfied that the bank is insolvent, that its books
are fraudulently kept, or that it has violated the law, he
may take possession of the bank's property, may examine
the bank, and apply for a receiver (2998). If a bank fails
to pay up its capital stock, or if its capital stock is impaired, it must make up the deficiency within ninety days
after notice from the examiner, or go into liquidation.
If it refuses, a receiver may be appointed. The examiner
has authority to empower the bank to reduce its capital,
avoid the receivership, and continue with smaller capital
(3000). If capital is impaired by reason of cancellation of
shares on which an assessment is unpaid, a receiver may
be appointed if the impairment is not made good in thirty
days (3002).
The examiner has authority over reorganizations and
consolidations (3001 and 3004). He determines what
books must be kept (2991).




312

Minnesota

— State

Banks

REPORTS.

At least four times a year, and at other times if requested by the examiner, every bank m u s t within seven"
days transmit to the examiner, in a form prescribed by
him, a report stating its assets and liabilities at t h e close
of business on a day specified in the report, if it is a special
request, otherwise on the last business day of t h e preceding month. This report is published in a local newspaper (2990). - Annually, banks file, with the register of
deeds and t h e examiner, a copy of their list of stockholders
with t h e a m o u n t of stock held by each (1907, chap. 137).
The report of t h e examining committee of t h e directors of
banks alluded to below is transmitted to the examiner
(2988).
EXAMINATIONS.

The directors appoint certain of themselves as an
examining committee to examine the bank's condition
semi-annually, and oftener if required. The committee
reports on all assets carried on the books in excess of the
actual value thereof. This report is transmitted to the
examiner (2988).
IV.—RESERVE

REQUIREMENTS.

Every bank keeps a reserve equal to one-fifth of its
demand liabilities. One-half of the reserve must be in
cash, including specie, legal tender, and national-bank
notes, and the rest may be in balances due from solvent
banks (2996).
V , — D I S C O U N T AND LOAN R E S T R I C T I O N S .

The total liability to any bank, as principal or surety,
of any person, corporation, or firm, including the liabilities
of the members, must not exceed 15 per cent of the bank's
capital and surplus, except t h a t if the loans are on first
mortgage of improved farms in Minnesota, the limit is




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Commission

20 per cent, though the mortgage loans must never exceed
50 per cent of t h e cash value of t h e mortgaged land. The
total liability of any officer or director must never be
more t h a n 10 per cent of stock and surplus. In reckoning
these loan limits, however, discounts are not regarded as
creating liability, if they are of commercial paper of certain sorts (1907, chap. 156). Loans to directors must be
subject t o the same regulations as to others and must be
made by the board and acted upon in the absence of t h e
applicant (2989).
No bank m a y loan or discount on the security of its
own stock (2992).
VI.—INVESTMENTS .

The real estate used by a bank for the transaction of its
business may include premises leased to others, b u t t h e
entire cost must not exceed 25 per cent of capital and
surplus. I t must hold no other real estate longer t h a n
five years, unless t h e time has been extended by certificate
of the examiner. The examiner must approve of changes
of location (2995 and 2976).
No bank m a y be purchaser or holder of its own stock
unless it is necessary to prevent loss on a previously contracted debt. Stock so acquired must be disposed of
within six months (2992).
X.—UNAUTHORIZED BANKING.

Persons, firms, and individuals doing a banking business must consent to supervision, otherwise they are not
entitled to use the word " b a n k " on stationery, or in
advertisements, etc. Unauthorized use of the title
" b a n k " is a misdemeanor (1907, chap. i n ) .
XL—PENALTIES.

The penalty for failure to keep proper books is $10 per
day (2991).




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Minnesota

— Savings

Banks

SAVINGS BANKS.
I.—TERMS OF INCORPORATION.

The statutes dealing with savings banks evidently contemplate institutions without capital stock. A savings
bank is defined t o be a corporation managed by disinterested trustees, solely authorized t o receive " t h e savings
of small depositors " (1909, chap. 103). I t must be shown
to t h e examiner t h a t it is expedient t o organize a savings
bank (3009), and t h a t preliminary publication has been
made of incorporators' names, etc. (2973).
The depositors in savings banks receive as nearly as
possible all t h e profits after expenses a n d surplus have
been set aside. When t h e surplus amounts t o 15 p e r c e n t
of t h e deposits, a t least once in three years t h e savings
bank divides t h e excess as an extra dividend, for which
purpose t h e depositors m a y be divided according t o the
character of their dealings with t h e b a n k (1907, chap. 468,
sec. 9).
I I . — L I A B I L I T I E S AND D U T I E S OF T R U S T E E S .

The business of a savings bank is managed by a board
of at least seven trustees, residents of t h e county of t h e
bank's location (2858 and 3014). The bonds which they
give m a y be sued upon by any person damaged b y t h e
trustees' breach (3012). If t h e trustees declare a dividend in excess of t h a t earned, those who vote for it are
liable to t h e bank (1907, chap. 468, sec. 9).
The trustees must meet at least once a m o n t h (1907,
chap. 468, sec. 3). No officer of a savings b a n k m a y
engage in lending money, protesting paper, or doing any
other sort of business in or about t h e bank except as his
duties require (3024). No trustee m a y have any interest
in t h e profits of t h e bank, nor take any compensation for
his services, except when he acts as an officer whose duties




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etary

Commission

require regular and faithful attendance, or as member of a
committee whose duties require actual service; the board
of trustees, exclusive of the one who is to receive compensation, vote upon his salary. No trustee or officer
may borrow funds or in any manner use funds except in
necessary disbursements authorized by specific resolution
of the board. No officer or trustee is allowed to make
himself liable to the bank for money loaned or in any
other way; nor may he become employed by any other
savings bank (1907, chap. 468, sec. 4).
III.—SUPERVISION.

The examiner passes upon the expediency of proposed
organizations (3009). When he believes that a savings
bank is conducting its business in an unsafe or unauthorized manner, he directs the methods to be discontinued.
If the bank refuses to comply or make report, or if the
examiner thinks it unsafe for the bank to continue business, he may institute proceedings for removal of trustees,
transfer of corporate powers to other persons, or any other
appropriate action (3030). See General Provisions, III,
for the important statute of 1909 on proceedings by the
examiner against corporations which are in default.
REPORTS.

The trustees report annually, in the form prescribed by
the examiner, the condition of the savings bank at the
end of the preceding calendar year. The report is based
on the examination discussed below, and includes the
items there enumerated (1907, chap. 468, sec. 10).
EXAMINATIONS.

The trustees annually cause a thorough examination to
»be made by an expert accountant, showing the savings
bank's condition at the end of the year, specifying the




316

Minnesota

— Savings

Banks

following: Loans or notes secured by mortgages, with items
as to locality, amounts paid, foreclosures, etc.; value of
bond investments, with particulars; loans on pledge of
securities, with particulars; defaulted interest on obligations held; investments in real estate; cash on hand, on
deposit, and where deposited; such other information as
the public examiner may require (1907, chap. 468, sec. 10).
Also amount due depositors, and all claims against the
savings bank which may be a charge on its assets; various
items with regard to deposits; their amounts; the amounts
withdrawn; dividends declared; number of accounts, etc.
(3028).
V.—DISCOUNT, LOAN, AND DEPOSIT RESTRICTIONS.

No trustee or officer may borrow the funds of a savings
bank nor become liable to the bank as surety (1907, chap.
468, sec. 4). See VI, below, for further loan restrictions.
Savings banks must receive all money offered for deposit
in amounts of not less than $1 nor more than a maximum
fixed by the bank's by-laws, which must, however, never
exceed $5,000 (3017).
VI.—INVESTMENTS.

Savings banks must not hold land and buildings for the
transaction of their business in excess of a value equal to
50 per cent of the net surplus of the bank (2976). Savings
banks may hold land sold on foreclosure of mortgages
owned by the bank, or upon judgments in favor of the
bank, or they may take land in settlement of debts, or
in exchange as part of the consideration of land they sell.
This land must ordinarily be sold within ten years of its
acquirement (3021). The authorized securities for savings bank investment include only the following: First,
United States securities; second, bonds of any State which
has not defaulted within ten years; third, bonds of coun-




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Monetary

Commission

ties, cities, etc., in Minnesota and neighboring States, or
securities of Minnesota, or securities of cities, counties,
etc., in the United States of at least 3,500 inhabitants,
but the total bonded debt of the municipality must not
exceed 10 per cent of its assessed valuation; fourth, notes
secured by mortgages on unencumbered realty in Minnesota and neighboring States worth, if improved, at least
twice, and if unimproved, at least three times, the amount
loaned, but not more than 70 per cent of the money of the
bank must be loaned in this way; fifth, notes secured by
such bonds or mortgages as the bank is authorized to invest in, but the collateral must not be taken for more than
its par value, the securities must equal the full amount
loaned, the loan must be for not more than a year and no
greater to any one person than 3 per cent of the deposits of
the bank—not more than one-fourth of the bank's deposits
must be thus loaned; sixth, railroad bonds of companies
which have received a land grant from the Government,
if the bonds are a first lien upon the railroad; seventh,
bonds of other railroad companies which are a first lien
upon a railroad within the United States, or in refunding
mortgage bonds of such a railroad, or in the bonds of any
railroad in the United States guaranteed by another railroad in the United States, provided that the railroad company, except one whose bonds are thus guaranteed, has
not within five years failed to pay dividends of not less
than 4 per cent on its whole capital, and has not defaulted
in payment on its bonds—savings banks, however, must
not invest in railroad bonds more than 20 per cent of their
deposits nor more than 5 per cent of their deposits in the
securities of one railroad; eighth, in debenture stock of a
Minnesota railroad, if the stock bears interest at at least
4 per cent and is secured by a first lien on the railroad,
bjut not more than 5 per cent of the bank's deposits may
be thus invested (3022, and 1907, chap. 468, sees. 7 and 8).




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Minnesota

—

Trust

Companies

Deposits must be promptly invested, except so much,
not exceeding 15 per cent, as m a y be required for current
necessary disbursements. This expense fund m a y be p u t
into demand loans secured by securities of the first two
classes, or if these loans are not to be obtained, t h e fund
m a y be deposited in solvent authorized banking institutions in Minnesota, New York City, or Chicago (3023).
Savings banks must not deal in property or engage in other
business not essential to the transaction of its own (3024).
X.—UNAUTHORIZED BANKING.

Only savings banks and safe deposit and trust companies
complying with all provisions of t h e law applicable to the
business done are allowed to make use of letter heads,
advertisements, etc., representing t h e m authorized to
transact t h a t sort of business, or t o use " s a v i n g s " or
" t r u s t " in their names, or to solicit or do a savings b a n k
or trust company business. An exception is made for
state banks, which m a y conduct and advertise a savings
department. The penalty for breach of these provisions
is $100 a day (2978, amd. by 1909, chap. 178).
XI.—PENALTIES.

The trustee who becomes interested in the savings
bank's profits, or who takes unauthorized compensation,
or becomes obligated to the bank, or becomes.employed
by another savings bank, vacates his office and becomes
ineligible to office in any savings bank. Six months' neglect of d u t y by a trustee is also cause for loss of office (1907,
chap. 468, sec. 4).

TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

The capital of a trust company must be not less t h a n
$200,000 nor more t h a n $2,000,000. Before it transacts
business a t least $200,000 must have been actually paid in




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Monetary

Commission

in cash, and at least one-fourth of its capital must have
been invested in securities belonging to classes first, second,
third, fourth, seventh, and eighth of the authorized investments for savings banks. The securities thus invested in
are deposited with the public examiner, as a guarantee for
the trust company's faithful discharge of its duties. The
company collects the income and may exchange securities
(3033)Trust accounts must be kept separate from the company's general accounts (3044).
II.—LIABILITIES AND DUTIES OF DIRECTORS.

Directors must own at least ten shares of stock, and a
majority of them must be residents of Minnesota (3034).
III.—SUPERVISION.

The provisions of 1909, chap. 179 (see General Provisions, III), though they do not expressly repeal the following section, seem inconsistent with it: When the officers of a trust company believe that it is about to become
insolvent, they report to the examiner. If he believes
from that report, or from his own examination, that it is
conducting its business unlawfully or unsafely, or that it
is insolvent, he may take possession of the company's
affairs for a thorough examination. If necessary, the
examiner may then apply to a court for a receivership.
The court judges of its necessity (3047).
REPORTS.

Trust companies annually render the public examiner a
detailed account of their condition, with such supplementary information in relation to particular transactions
as the examiner may require. A condensed statement of
the annual account with a list of the directors, approved
by the examiner, is published in a local newspaper (3046).




320

Minnesota

—

Trust

Companies

V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

Trust companies may not loan any filnds to officers or
employees. No officer or employee may become indebted
to a trust company by means of overdraft or other contract (3045).
VI.—INVESTMENTS.

The entire cost of land and buildings for t h e transaction
of a trust company's business m u s t not exceed 25 per cent
of its capital and surplus (2976).
A trust company m a y acquire real and personal property
necessary for its business. If it acquires real estate on
foreclosure of a mortgage in t h e course of its legitimate
business, it m a y deal with the real estate for its best
interests, and may purchase if necessary at foreclosure or
judicial sale. I t m a y loan money and secure these loans
b y mortgage, purchase and sell securities, and m a y guarantee title t o securities sold b y it (3035). I n ordinary
cases trust funds must be invested in the same securities
authorized for savings bank investments (3040).
It
must not engage in unauthorized businesses (3045).
VII.—OVERDRAFTS.

No officer or employee m a y become indebted t o his
corporation b y means of overdraft or other contract
(3045).
X . — U N A U T H O R I Z E D T R U S T COMPANY B U S I N E S S .

See Savings Banks, X .
XI.—PENALTIES.

Directors who borrow from t h e trust company are guilty
of larceny (3045).

S. Doc. 3 53, 61-2




21

321

MISSISSIPPI.
T h e Code of 1906 contains one brief chapter (14), entitled " Bank statements, 1 , practically the only banking law
of t h e State. The digest includes this chapter, a few
other sections of the Code relating to banks, and two statutes of 1908. The references t h a t are simply numbers in
parenthesis are to sections in the Code of 1906. Since
t h e statutes make no effort to provide separately for different classes of banking institutions, the digest is not
divided under the usual three heads; each provision is
given, using the words of t h e statute, whether " b a n k s , "
or " b a n k s and trust companies," etc. The digest carries
legislation through the session of 1908.
I . — T E R M S O F INCORPORATION.

" E v e r y bank and every person, corporation, or association of persons * * * organized to receive money
on deposit, issuing, buying, or selling exchange, or doing
a banking business " m u s t have, in towns of 500 or less, a
capital of not less t h a n $10,000, and in towns or cities of
over 500, not less t h a n $15,000. This must be paid in
in cash before business is begun, and, if the capital is
larger, the additional amount m u s t be paid in in not less
t h a n five equal monthly installments (1908, chap. n o ) .
Any bank with a paid up capital of at least $100,000
may include a trust company business in its transactions
(263). " S u c h corporations" (by which trust companies
appear to have been meant) are governed by the same
laws as other banking institutions (264).




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Mississippi

— General

Provisions

I I . — L I A B I L I T I E S AND D U T I E S O F STOCKHOLDERS AND
DIRECTORS.

There is no provision for liability of shareholders in
banks.
The board of directors "of every b a n k " must hold at
least three regular meetings a year to make full investigation of the affairs of the bank (262). The directors, or
a majority of them, "of all banks, branch banks, and
trust c o m p a n i e s " must personally inspect the affairs of
the institution on the first Wednesday of J a n u a r y , April,
July, and October, or within ten days after those days
(1908, chap. n o ) . The latter of the two provisions just
stated seems to override the former in the m a t t e r of requiring four inspections a year b y directors instead of three.
The director of any " b a n k of d e p o s i t " who authorizes a
loan in excess of one-fifth of the capital to any officer or
director is individually liable to the bank for loss thereby
sustained (922).
III.—SUPERVISION.

Apparently there is no particular official charged with
the supervision of b a n k s ; the auditor of public accounts
receives reports, etc.
REPORTS.

" E v e r y b a n k and every branch bank and every person,
corporation, or association of persons receiving money on
deposit, or issuing or buying and selling exchange, or
otherwise doing a banking business" must make a balanced statement to the auditor a t least four times a year
with reference to the condition of t h e bank, its resources
and liabilities, and the a m o u n t of indebtedness to the bank
of owners, stockholders, and directors. The auditor furnishes forms. The statements are published in a local
newspaper (1908, chap. i n ) . The requisitions m u s t be




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made at times known only to the auditor (257). After
providing that a bank may also do the business of a trust
company, it is said that "such corporation" must make
the same reports as other banking institutions (264); it is
clearly meant that trust companies must make the reports.
Directors of "banks, branch banks, and trust companies"
after their quarterly inspection must report their findings
to the auditor (1908, chap. n o ) . For reports required
for purposes of taxation see 4273; and for the penalty for
failing to make those reports, 1048.
EXAMINATIONS.

There seems to be no provision for examination by an
official of the State. The board of directors make the
examinations explained above (262, and 1908, chap. n o ) .
V.—DISCOUNT AND LOAN RESTRICTIONS.

''Banks" may loan money to their stockholders; but
" a bank of deposit" must not loan a sum greater than
one-fifth of its capital to any officer or director (922).
Trust companies (that is what "such corporation" seems
to mean in the section) may loan "on real estate or collateral security " (264).
VI.—INVESTMENTS.

Trust companies may own such real estate as is required
for the convenient transaction of their business, and such
as they may acquire in the enforcement or collection of
debts due them (265).
VIII.—BRANCHES.

There is a provision in the Code of 1906 forbidding the
establishment of branches; there may be no branch banks
in Mississippi, and no Mississippi bank may establish a




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Mississippi — General Provisions
branch in Mississippi or elsewhere (260). F o r branches
already operating when this s t a t u t e went into effect it was
provided t h a t there should be set apart a n d devoted t o
each branch n o t less t h a n $co,ooo of t h e parent corporation's capital for t h e exclusive use of t h e branch (261).
X.—UNAUTHORIZED BANKING.

' " B a n k " or " b a n k i n g " must n o t appear in t h e n a m e of
an institution not authorized by its charter t o do a banking
business, a n d " t r u s t " or " t r u s t c o m p a n y " must n o t a p pear in t h e name of a n y corporation n o t authorized b y
its charter t o transact a trust company business (266).
XI.—PENALTIES.

The penalty for rendering a false statement of t h e
affairs of a banking corporation is a fine upon t h e members of n o t less t h a n $100 (1908, chap. n o ) . Failure t o
make t h e regular statement required within t e n days
after t h e requisition is mailed entails a penalty upon t h e
bank or banking house of $25 a day (258). If the directors of any " b a n k , branch bank, or trust company " fail t o
make a n inspection quarterly and certify their findings t o
the auditor, the corporation suffers a penalty of from $100
to $500 for each failure (1908, chap. n o ) . T h e officer
or employee of " a n y b a n k ' or "establishment conducting the business of receiving deposits," who knowing t h e
establishment t o be insolvent receives deposits without
informing t h e depositor of its condition is punished b y
not more t h a n five years' imprisonment (1169).




3:25

MISSOURI.
The digest of t h e banking statutes of Missouri is based
on the compilation of t h e banking laws published in 1908
by t h e secretary of state of Missouri. I n the Revised
Statutes of 1899 there were, in Chapter X I I , three articles
pertinent to our subject: Article V I I I , " B a n k s of deposit
and discount;" Article X I I , " T r u s t companies;" and
Article X I I I , "Savings and safe-deposit institutions."
The laws of 1907 enacted complete new articles to supersede those three, and added Article X X , " S t a t e banking
d e p a r t m e n t . " These new laws went into effect J a n u a r y
15, 1909. I t is a provision of the constitution of Missouri
t h a t acts authorizing or creating corporations with banking powers, except banks of deposit or discount, and
amendments, be submitted to popular vote (constitution, Art. X I I , sec. 26).
The provisions of Article X X are in the main applicable
to all three classes. They have been inserted once under
" Banks," and are merely mentioned under "Savings
banks " and " T r u s t companies." A few of t h e provisions
of Article V I I I which are applicable only to unincorporated
bankers are inserted; in m a n y respects private bankers
are m a d e subject to the same rules as banks of deposit
and discount (VIII, 29). The references are b y article
and section, t h e R o m a n figure representing t h e article;
t h e Arabic, the section in t h a t article. The statutes have
been examined through those of 1909.




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—

State

Banks

BANKS.
I . — T E R M S O F INCORPORATION.

The title of t h e article on commercial banks is " B a n k s
of deposit and discount." There is no provision forbidding such banks t o accept savings deposits, nor does it
seem t h a t such a rule is to be implied from Chapter X I I I ,
section 9, which forbids savings banks to transact a business of banking, whether of issue, deposit, or discount,
especially since banks m a y pay interest on deposits
(VIII, 4).
The cash capital of every b a n k must be not less t h a n
$10,000, nor more t h a n $5,000,000, and for banks situated
in cities of 150,000 or more, the cash capital m u s t be not
less t h a n $100,000 (VIII, 6). The shares m u s t be not
less t h a n $100 each (VIII, 7). One-half must be paid up
in lawful money before business is begun (VIII, 10).
The remaining half must be paid up in cash within a year
(VIII, 11). The bank commissioner makes a preliminary
examination before granting the certificate of incorporation (VIII, 5).
Dividends m a y be declared semiannually, if they have
been earned, b u t there must be no dividend if t h e capital
has been impaired so as not to be worth in good resources
the full amount paid in. When the capital stock is
impaired to the extent of 25 per cent, t h e b a n k m u s t
cease doing business, unless the capital is m a d e good
within sixty days or reduced equal to the impairment
(VIII, 16).
Before declaring a dividend, every banking institution
m u s t set apart 10 per cent of the net profits for the dividend
period for surplus fund, until it amounts to 20 per cent of
the capital stock (VIII, 21). A further provision for a
larger permanent surplus, important in determining if




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there are excessive loans, is discussed under V, Loans
( V I I I , 20).
Private bankers, t h a t is, those not incorporated, who
receive deposits, sell exchange, etc., m u s t have a paid-up
capital of at least $10,000, and if carrying on business in
a city of 150,000 or more, a paid-up capital of a t least
$100,000 (VIII, 27). Private bankers m u s t set apart 20
per cent of each year's net profits, until they have a surplus of 20 per cent of their capital (VIII, 28).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

I t is a constitutional provision t h a t dues from private
corporations m a y be secured by such means as m a y be
prescribed by law, b u t t h a t in no case, is a stockholder
to be individually liable in any amount above t h e a m o u n t
of stock owned (constitution, Art. X I I , sec. 9). If any
shareholder in a bank transfers his shares before they are
fully paid, he, as well as his transferee, is liable for a year
for whatever is still due (VIII, 7).
The board of directors of every b a n k consists of from
three to twenty-one shareholders, each a resident of the
S t a t e and holder of at least two shares. No shareholder
is eligible if the bank holds a judgment against him.
The board must meet once a m o n t h to pass upon t h e
business since t h e last meeting (VIII, 9). Any officer or
director who assents to declaring a dividend while t h e
capital stock is impaired, is personally liable t o t h e
creditors of t h e corporation for loss occurring because of
t h e dividend (VIII, 16). Any director or officer of a
b a n k or banking institution, organized under any law of
Missouri, who receives deposits or creates debts after he
has knowledge of t h e institution's insolvency, is individually responsible for t h e obligations so contracted
(VIII, 23). I t is a constitutional provision t h a t t h e




328

Missouri

—

State

Banks

officer or director who participates in t h e reception of
deposits of this sort, or the creation of debts, is guilty of
a crime, and is individually responsible (constitution,
Art. X I I , sec. 27).
III.—SUPERVISION.

There is a state b a n k department under t h e control of
a bank commissioner (XX, 2). The commissioner holds
office for four years. He and his deputy m u s t have had
a t least three years' practical experience in banking business, or have served three years in some state banking
department. No one interested in a bank or t r u s t company is eligible (XX, 3). The commissioner's salary is
$3,500 a year with necessary expenses (XX, 5). The
commissioner and his subordinates must keep secret
information obtained in t h e course of examinations,
except so far as their public d u t y may require it t o be
divulged (XX, 8). The commissioner and his employees
must not accept payment other t h a n the salary fixed b y
law (XX, 19).
If the commissioner has reason t o believe t h a t t h e capital of any corporation subject t o his control is impaired,
he requires'the deficiency to be made good. If, from an
examination or otherwise, it appears t h a t any bank, savings bank, or trust company receiving deposits is conducting its business in an unsafe or unauthorized manner,
t h e commissioner directs the illegal and unsafe practices
t o be discontinued. If any corporation refuses t o obey
his orders, or if it appears to the commissioner t h a t it is
unsafe or inexpedient for t h e corporation to continue
business, or t h a t losses are threatened, etc., t h e commissioner requires t h e attorney-general to institute whatever
proceedings t h e case m a y require, such as removal of
officers or other remedy. If, from an examination, it is
discovered t h a t a bank, savings bank, or trust company is




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Commission

insolvent, or that its continuance in business is dangerous,
and if the official who made the examination recommends
that the bank be closed, then the commissioner may
immediately close the corporation and take charge of its
property. He examines its affairs thoroughly to ascertain its condition, and if he finds it insolvent, requires the
attorney-general to institute proceedings for a receiver.
The commissioner may appoint a special agent to act as
receiver for a period not longer than sixty days. A bank,
savings bank, or trust company may voluntarily put itself
in the control of the commissioner (XX, 10). All banking corporations are forbidden to make a general assignment, and are required to put themselves in the hands of
the bank commissioner instead, if they are threatened
with insolvency (XX, 13). If any of these corporations
refuses to be examined, receivership proceedings may be
instituted (XX, 14). If the corporation's own stock,
acquired by it under provisions discussed later, is not disposed of within six months, receivership proceedings may
be instituted (XX, 15).
Private bankers are subject, so far as possible, to the
provisions in the above paragraph. Moreover, if they
loan on account of the personal security of -one of the
owners of the private bank in excess of 10 per cent of its
capital and surplus, the commissioner may have them
put into the hands of a receiver (XX, 16).
If the commissioner or his subordinate report fraudulently, any one injured by the fraud may sue on the
official's bond. Neither the commissioner nor any subordinate may be receiver of a corporation he has examined (XX, 18).
REPORTS.

In the article applicable only to banks, there is the
requirement that each bank must furnish, whenever so




330

Missouri

—

State

Banks

required b y t h e commissioner, a statement of its actual
condition at the close of business on a past day designated
b y him (VIII, 12), in a form prescribed b y t h e statute,
and including t h e following items: Resources—Loans and
discounts, undoubtedly good on personal or collateral;
loans, real estate; overdrafts; bonds and stocks; real
estate (banking house); other real estate; furniture and
fixtures; due from other banks and bankers, subject to
check; cash items; currency; specie; other resources.
Liabilities—Capital stock paid in; surplus fund; undivided
profits, n e t ; due to banks and bankers, subject to check;
individual deposits, subject to check; time certificates of
deposit; demand certificates of deposit; cashiers' checks;
bills payable and rediscounts; other liabilities (VIII, 13).
This statement is published in a local newspaper (VIII,
14). The b a n k commissioner gives no notice of t h e day
on which he will call for a statement. He makes calls for
statements twice a year, and oftener if he thinks necessary
(VIII, 15). Private bankers are, for purpose of reports
and in every other case where the article on the state
banking department is applicable, made subject to the
same rules t h a t apply to banks (VIII, 29).
In the article on the state banking department, it is
provided t h a t in addition to all other examinations or
reports, every bank, savings bank, and trust company
receiving deposits m u s t have an examination made by a t
least three shareholders into all the affairs of the company;
on this examination they base a report including various
particular items, and such others as the b a n k commissioner may require, which report, within ten days after the
completion of the examination must be filed in the institution and with the commissioner. H e sends out a call
at least every year with blanks for this report (XX, 17).
Whenever a bank, savings bank, or trust company has
been placed in t h e hands of a receiver, t h e bank com-




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Monetary

Commission

missioner, if he thinks it necessary, may make special
examinations, the result of which he reports to the court
which appointed the receiver (XX, 12). Whatever reports receivers make to their courts they file duplicates
of with the commissioner (XX, 11). The result of all
examinations during the previous year is embodied in
a report made by the commissioner to the legislature
(XX, 9).
EXAMINATIONS.

A preliminary examination is made by the commissioner before he grants a certificate of incorporation to
any bank or trust company (VIII, 5). At least once a year
the commissioner causes an examination to be made of
every bank and trust company receiving deposits (XX, 9).
Special occasions, when the commissioner makes examinations, were discussed above; he does so when he has
taken possession of the assets of a corporation prior to
proceedings for a receivership (XX, 10) and also when
a corporation has been declared insolvent and placed
in the hands of a receiver, and the interests of the depositors and creditors seem to require an examination
(XX, 12). Also, as above explained, in addition to all
other examinations required, every bank, savings bank,
and trust company receiving deposits must make at least
yearly, by a committee of at least three shareholders, a
thorough examination, on which they base a report in
the form prescribed by the commissioner (XX, 17).
IV.—RESERVE REQUIREMENTS.

Banks must keep an account of cash on hand and cash
due from other banks equal to at least 15 per cent of demand deposits. Whenever the reserve falls below 15
per cent no new loans may be made (VIII, 8).




332

Missouri

—

State

Banks

V.—DISCOUNT AND LOAN RESTRICTIONS.

No bank may loan to any person or company an
amount exceeding 25 per cent of its capital stock. For
this purpose the bank may consider as capital stock a
permanent surplus, the setting apart of which has been
certified by the commissioner and which can not be
diverted without due notice to the commissioner. This
surplus must be equal to or in excess of 50 per cent of the
capital. The discount of certain commercial paper well
secured is not considered as money borrowed; however
(VIII, 20).
No director or officer of a bank may borrow in excess of
10 per cent of the capital and surplus without the consent
of a majority of the directors, exclusive of the borrower
(VIII, 9).
No bank, savings bank, or trust company receiving
deposits may loan on the security of its own shares unless
necessary to prevent loss upon a previous debt, in which
case the stock must be gotten rid of in six months (XX, 15).
VI.—INVESTMENTS.

It is a constitutional provision that no corporation may
hold real estate for a longer period than six years, except
such as is necessary and proper for carrying on its legitimate business (constitution, Art. XII, sec. 7).
Banks are prohibited from employing their funds in
commerce by buying and selling goods, etc., but they
are allowed to sell all kinds of property which may come
into their possession as collateral security for loans, or in
the ordinary collection of debts (VIII, 19).
Banks, savings banks, and trust companies are forbidden
to purchase shares of their own stock unless the purchase
is necessary to prevent loss on a debt previously contracted, in which case the stock must be sold within six
months CXX, 15).




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Commission

VII.—OVERDRAFTS .

These seem surely allowed in t h e case of banks, for t h e y
appear as an item in t h e resources in bank statements
(VIII, 13). Moreover, it seems they must be generally
permitted in the case of banks, savings banks, and t r u s t
companies, for in t h e provision for annual examinations
t o be m a d e by a committee, it is provided t h a t t h e y examine into overdrafts (XX, 17).
VIII.—BRANCHES.

Branches are forbidden (VIII, 4).
X.—UNAUTHORIZED BANKING.

No one m a y advertise by a sign or in a newspaper or on
letter heads, etc., using the words " b a n k , " " b a n k e r / ' or
" b a n k i n g " unless doing business under United States or
Missouri law (Revised Laws of 1899, sec. 1947)
XL—PENALTIES.

If t h e bank commissioner or his subordinate discloses
information except in t h e course of duty, he is guilty of a
misdemeanor, punishable by forfeiture of office and a fine
of from $100 to $1,000 ( X X , 8). If t h e commissioner
warns banks of an approaching report, he is guilty of a
misdemeanor, punishable b y loss of office and a fine of not
less t h a n $500 (VIII, 15). If the commissioner or a
subordinate is guilty of breach or neglect of d u t y for which
no other penalty is provided, he commits a felony, punishable by imprisonment in t h e penitentiary for from two t o
five years, or fine of from $100 t o $1,000, or imprisonment
in a county or city jail for from one m o n t h to twelve
months, or both fine and imprisonment (XX, 20).
Officers of banks who refuse to m a k e t h e semiannual
s t a t e m e n t required by t h e commissioner, or m a k e a false




334

Missouri

— Savings

Banks

statement, are guilty of a misdemeanor, punishable b y fine
of from $100 to $500, or by imprisonment of from one t o
twelve months, or b y b o t h (VIII, 15). I t is also provided
in t h e article on commercial banks t h a t private bankers
who refuse t o render reports or who make false reports or
who violate other provisions of t h e article are guilty of a
misdemeanor, punishable b y a fine of from $500 t o $5,000,
or imprisonment of from one to twelve months, or b o t h
(VIII, 29).
Any bank, savings bank, or t r u s t company t h a t fails t o
report t o t h e commissioner, within t h i r t y days of t h e
notification, the result of t h e examination by t h e committee of three stockholders, forfeits $100 per day during
t h e delay (XX, 17).
The officer of any banking institution, including t r u s t
companies, who receives deposits or creates debts with
knowledge of the institution's insolvency, commits a
felony, punishable as theft of money to the a m o u n t of t h e
obligation created would be (Revised Laws, 1899, sec.
1945). There are other penal provisions in t h e Revised
Laws for punishment for false entries in books, altering
or forging instruments, etc. (Revised Laws, 1899, sec. 2000
et seq.).

SAVINGS BANKS.
I . — T E R M S O F INCORPORATION.

Article X I I I , " Savings and safe deposit institutions,"
apparently contemplates organizations with capital stock
( X I I I , 2.). I t contemplates a safe deposit business t o be
done in connection with savings banking ( X I I I , 7), b u t
savings banks are not allowed to transact a banking business of deposit or discount ( X I I I , 9).
The capital of savings and safe deposit institutions m u s t
be not less t h a n $10,000 in cities of 50,000 or under, not
less t h a n $50,000 in cities of 50,000 to 150,000, and not less




335

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Monetary Commission

than $100,000 in cities of 150,000 and over. The capital
must be paid in in lawful money and is regarded as a
guaranty fund for the security of depositors (XIII, 4).
The capital stock must be not more than $5,000,000 (XIII,
15). Shares are of $100 each, apparently (XIII, 2).
Whenever interest at not less than 3 per cent per year
has been paid out of net profits for the current six months
on all savings or trust funds entitled to interest, the
directors may declare out of remaining net earnings a
dividend on the stock not greater than 6 per cent a year.
No dividend, however, may be declared until at least onetenth of the net profits for the preceding six months has
been carried to a guaranty fund; this continues until
the fund amounts to the capital stock. The guaranty
fund must be invested according to the provisions given
later under VI (XIII, 17). If for the preceding six
months the net profits are not sufficient to pay a 3 per cent
dividend for those six months, then whatever excess of net
profits is earned in the succeeding six months over interest
to depositors and contributions to guaranty fund is
applied to arrears of dividends (XIII, 18). When the
guaranty fund amounts to a sum equal to the capital stock,
and interest has been paid and dividends on capital stock
to date, then, if there are still net profits undisposed of, the
directors set aside a sum not exceeding one-fourth of 1
per cent of the total deposits on that day, until the sums
so set aside, known as the indemnity fund, amount to 10
per cent of the whole deposits. This indemnity fund is
held as an added security against loss (XIII, 19). When
the guaranty fund amounts to as much as the capital stock,
and interest and dividends have been paid to date, and
the indemnity fund has risen to 10 per cent of the whole
deposits, then, if the net profits still amount to 1 per cent
of the deposits that have remained in the bank for at least
one year preceding, these profits are at the end of every




336

M iss ou r i

— Savings

Banks

three years divided among t h e depositors whose deposits
have remained in the bank at least one year preceding,
t h e division being in proportion to t h e a m o u n t of interest
which has been paid on t h e deposits during t h e three years
next preceding ( X I I I , 20). I n no case m a y interest or
dividend be paid until t h e directors have examined t h e
condition of t h e savings b a n k and have found t h a t the
interest and dividend have been actually earned ( X I I I , 21).
II.—LIABILITIES

AND

DUTIES

OF STOCKHOLDERS AND

DIRECTORS.

The provision of Article X I I , section 9, of t h e constitution, t h a t no stockholder in a private corporation is individually liable above t h e a m o u n t of stock held, here
obtains.
Every savings b a n k has from five to thirteen directors
who must be stockholders, and a majority of t h e m must
be citizens of t h e S t a t e ( X I I I , 5). A director is not disqualified by reason of his being director or officer of another
banking or savings institution ( X I I I , 6). Neglect of
duties, or borrowing the funds of t h e savings bank, is
ground for loss of office ( X I I I , 10). Meetings m u s t be
held once a m o n t h ( X I I I , 11). The directors m u s t
examine assets before declaring a dividend or interest
( X I I I , 21). Directors must not receive p a y m e n t for their
services unless t h e y are such as require regular and faithful attendance, in which case t h e majority, exclusive of
t h e director who is being paid, vote t h e compensation
( X I I I , 10 and 24). No one acting for a savings b a n k m a y
t a k e a fee for a loan made by t h e savings b a n k other t h a n
appears on t h e face of the contract of loan ( X I I I , 8).
T h e constitution makes it a crime for an officer or director
of any banking institution t o receive deposits when he
knows t h e b a n k t o be insolvent (constitution, Art. X I I ,
sec. 27)
S. Doc. 353, 61-2




22

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Monetary

Commission

III.—SUPERVISION.

F o r most of t h e provisions for supervision of savings
banks, see I I I , under Banks. I t is especially provided in
t h e article on savings banks, besides, t h a t when it appears to the b a n k commissioner from his examination or
report t h a t a savings bank is conducting its business in an
unsafe or unauthorized way, he must direct a discontinuance of the practices, and if the savings bank refuses to
report or to comply with his orders, or if it appears to him
t h a t the corporation should stop business, t h a t it is in a
dangerous condition, or t h a t directors or officers have
been guilty of misconduct, he must institute, through t h e
attorney-general, whatever proceedings the case requires.
These proceedings m a y be for orders restraining paying
out undue amounts of funds, or for the removal of officers
or for t h e appointment of receivers. If t h e order is one
restraining the savings bank from paying out funds, t h e
commissioner m a y t a k e temporary possession of t h e property of t h e savings b a n k ( X I I I , 31).
REPORTS.

Every savings bank reports annually to t h e b a n k commissioner its condition on t h e 1st of September. The
reports state the amount loaned on bond and mortgage,
with a list of such loans; the values of bond investments,
with particulars; the amount loaned on pledge of deposits, with statement of collateral; the cash on h a n d
a n d on deposit, with names of depositaries; the a m o u n t
of all assets, and such other information as t h e commissioner m a y require ( X I I I , 26). Also all liabilities on t h e
morning of September 1; amounts due depositors, including dividends, and any other claims chargeable against
the assets. The report states also t h e a m o u n t of deposits
made during the year; a m o u n t drawn out; a m o u n t of




338

Missouri

— Savings

Banks

interest received and earned; interest paid depositors;
number of accounts opened and reopened; the number
closed; the number open at the end of the year; and
whatever other information the commissioner may require (XIII, 27). This report is based on an examination which must be made by not less than three directors
(XIII, 28). In addition to all other reports there is the
annual report after examination by a committee of three
stockholders (Banks, III).
The bank commissioner reports annually to the legislature a statement of the condition of every savings bank
that has reported to him during the preceding two years,
with a list of new savings banks (XIII, 29). The results
of all examinations made within the past year are embodied in the annual report (XX, 9).
EXAMINATIONS.

Every two years, or oftener if necessary, the commissioner examines personally or by an agent every savings
bank in the State (XIII, 30 and XX, 9). The directors
make an examination before declaring any interest or
dividend (XIII, 21). They make a thorough examination upon which the annual report is based (XIII, 28).
There is also the examination by a committee of three
shareholders (see Banks, III).
IV.—RESERVE REQUIREMENTS.

The restrictions on investments include a provision in
the nature of a reserve requirement; 15 per cent of total
assets must be kept as a cash fund on hand or on deposit
in Missouri banks or trust companies, or national banks
in Missouri (XIII, 7).




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V.—DISCOUNT, LOAN, AND DEPOSIT RESTRICTIONS.

Savings banks may not loan money upon or discount
notes, bills of exchange, or other personal security (XIII, 9).
Loans may be made to depositors not exceeding 50 per
cent of the amount on deposit from the borrower, in
which case the deposit and book of the depositor are
collateral (XIII, 9).
No director or officer of the savings bank may borrow
the funds of the bank or be indorser for moneys loaned
by the bank (XIII, 10).
(For loans on security of the savings bank's own stock,
see this heading under Banks.)
Savings banks with a capital of $10,000 may receive
deposits up to $200,000; those with a capital of $25,000
may receive deposits up to $500,000; and those with a
capital of $50,000 may receive deposits up to $1,000,000.
The statute provides that nothing in this article shall be
so construed as to prevent the issuing of certificates of
deposit payable on demand (XIII, 12). Pass books must
be called in every three years and verified. The aggregate amount of deposits received from one individual or
corporation must not exceed $4,000, including dividends
(XIII, 14), In allowing interest to depositors, they may
be classified according to the character, amount, and duration of their dealings with the savings bank (XIII, 16).
VI.—INVESTMENTS.

Savings banks may hold real estate as follows: First, a
plot and building for the transaction of the bank's business, from part of which rent may be derived. The cost
must not exceed $100,000 except in cities of over 300,000,
where the cost must not exceed $250,000. Second, such
real estate as is purchased at sales on foreclosure of
mortgages owned by the bank, or upon judgments ren-




340

M iss ou r i

— Savings

Banks

dered for debts due it, or such as is purchased to secure
old debts. All t h e real estate under second m u s t be sold
within five years ( X I I I , 8). See the constitutional prohibition upon ownership b y any private corporation of
any real estate except t h a t necessary for its business, for
a longer period t h a n six years (constitution, Art. X I I , sec.
7). Savings banks must not deal in merchandise, etc.
(XIII, 9)(For the provisions on purchase of its own stock b y a
savings bank, see VI under Banks.)
The funds of savings banks m a y be invested as follows:
First, in United States securities; second, in Missouri
bonds; third, in bonds of any State t h a t has not defaulted in p a y m e n t on its bonds for five years; fourth, in
bonds of any Missouri municipality t h a t has not defaulted
within five years, provided the bonded debt does not
exceed 5 per cent; fifth, in the bonds of any municipality
of more t h a n 20,000 inhabitants in certain enumerated
States, if the entire bonded debt of the city or county in
question does not exceed 5 per cent of the assessed value
of its property, and if t h e municipality, " o r t h e State in
which it is situated, has not defaulted in the p a y m e n t of
any p a r t of either principal or interest thereof" within
five years; no savings bank may invest more t h a n 25 per
cent of its assets in bonds of municipalities outside of
Missouri, nor invest more t h a n 3 per cent in the bonds of
any one of those municipalities, nor invest in more t h a n
10 per cent of all t h e bonds issued b y any of those municipalities, nor invest in the bonds of any of those municipalities issued to aid in t h e construction of a railroad;
sixth, in t h e first mortgage bonds of any steam railway
the income of which is sufficient to pay all operating
expenses and fixed charges, if the railway is located in
certain specified States, and if it has paid interest on the
bonds for three years; the first mortgage bonds of several




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specified railways are included; seventh, in bonds or
notes secured b y first mortgages of unincumbered real
estate worth twice the loan, b u t if the loan is on unimproved and unproductive real estate it must not be more
t h a n 40 per cent of t h e value of t h e land—not more t h a n
60 per cent of t h e funds of t h e savings b a n k m a y be t h u s
loaned, and a committee of investigation m u s t report on
the value of t h e land; eighth, in real estate subject t o
t h e limitations given above. Current expenses m a y be
m e t b y pledging or selling securities. Fifteen per cent of
t h e whole a m o u n t of assets m u s t be kept as an available
cash fund for current expenses. This m a y be kept on
h a n d or on demand deposit in Missouri banks or national
banks in Missouri or in Missouri trust companies. The
deposits in any one bank or trust company, however,
m u s t not exceed 20 per cent of t h e total deposits, capital,
and surplus of t h e depositor b a n k ( X I I I , 7).
XL—PENALTIES.

T h e special savings b a n k penalties include loss of office,
in t h e case of t h e director who borrows of t h e savings
bank, or who fails to attend meetings or to perform his
duties for three successive months without excuse from
t h e board ( X I I I , 10), and t h e penalty of $100 per day
payable b y t h e savings b a n k which withholds a report
( X I I I , 28). Savings b a n k officers are within t h e felony
provision for receiving deposits while insolvent (Revised
Laws, 1899, sec. 1945).

TRUST COMPANIES.
I . — T E R M S OF INCORPORATION.

The amount of capital stock must be not less t h a n
$100,000, actually subscribed, and t h e amount authorized
must be not more t h a n $10,000,000 ( X I I , 7). Before




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—

Trust

Companies

business is begun, one-fourth of the authorized capital
must be actually subscribed, and one-half the subscribed
capital must have been paid in in lawful money (XII, 2).
The bank commissioner makes a preliminary examination
before business is begun (VIII, 5).
Trust companies, whenever a dividend is paid to stockholders, must set aside 10 per cent of the net earnings of
the last dividend period for surplus until the surplus
amounts to 20 per cent of the capital (XII, 56).
Dividends may be declared every six months, or oftener,
but they must not be declared while the corporation is
insolvent, nor when the declaration itself will render the
corporation insolvent (XII, 10).
II.—LIABILITIES

AND

DUTIES OF STOCKHOLDERS AND
DIRECTORS.

Stockholders' liability is limited by the constitution for
all private corporations to the amount of stock held (constitution, Art. XII, sec. 9).
There must be not less than five, nor more than twentyfive, directors, who must be stockholders in the corporation, and a majority of them citizens of Missouri (XII, 7).
They must meet at least monthly to pass upon the business of the company since the last meeting. The records
at that meeting must show aggregate debts at the time
and the liability of each director and officer to the company (XII, 9). If .the directors knowingly declare a dividend while the corporation is insolvent, they are liable for
the debts of the corporation then existing or thereafter
contracted, unless they record their objection (XII, 10).
See also the constitutional provision making the reception
of deposits under such circumstances a crime (constitution, Art. XII, sec. 27).




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III.—SUPERVISION.

See the general provisions for supervision under III in
Banks. If the reserve of a trust company falls below
the 15 per cent required, then the secretary of state
may notify the trust company to make the reserve good;
if it fails to do so within thirty days, then the commissioner may direct the attorney-general to institute whatever proceedings the case requires (XII, 5a). A deposit
in certain securities to the amount of $200,000, qualifies
the trust company to act as guardian, etc. (XII, 18).
REPORTS.

Whenever required by the bank commissioner, within
fifteen days of his call, every trust company must furnish
a statement giving such particulars as the commissioner
prescribes of its condition at close of business on a designated day prior to the call. This statement must be published in a local newspaper (XII, 11). There is also the
report of the annual examination by a committee of three
shareholders (see Banks, III).
The commissioner embodies in his report to the legislature, as in the case of banks, the results of his trustcompany examinations (XX, 9).
EXAMINATIONS.

A preliminary examination is made before any trust
company begins business to make sure that the required
capital has been subscribed and paid in, etc. (VIII, 5).
Regular examinations of every trust company receiving
deposits are made by the commissioner or a subordinate
at least once a year, and oftener if necessary (XX, 9).
There is also the examination by a committee of three
shareholders (see Banks, III).




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—

Trust

IV.—RESERVE

Companies

REQUIREMENTS.

Every t r u s t company must have in cash on h a n d and
due from other banks and t r u s t companies an a m o u n t equal
to 15 per cent of its demand deposits. If t h e reserve
falls below t h e 15 per cent no new loans or discounts
m a y be m a d e ( X I I , 5a and 8).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

No director or officer of a trust company receiving
deposits m a y borrow in excess of 10 per cent of t h e capital
and surplus without t h e consent of a majority of the
directors, exclusive of t h e borrower (XII, 9).
(For provisions dealing with loans b y a t r u s t company
on security of its own stock, see V, under Banks.)
VI.—INVESTMENTS.

There is, as before, the constitutional provision t h a t no
corporation m a y hold real estate for a longer period t h a n
six years, except such as is necessary and proper for carrying on its legitimate business (constitution, Art. X I I ,
sec. 7). T r u s t companies m a y own only such real estate
as is necessary for the transaction of their business and
such as t h e y m a y acquire in t h e enforcement and collection of debts due t h e m ( X I I , 10). The directors of t r u s t
companies m a y invest " t h e moneys placed in their
c h a r g e " in loans secured by real estate or other sufficient
collateral, in United States or Missouri bonds, or in bonds
of Missouri municipalities ( X I I , 10).
(For provisions dealing with purchase b y a t r u s t comp a n y of its own stock, see VI, under Banks.)
VII.—OVERDRAFTS .

These seem t o be permitted in the case of trust companies, for it is provided t h a t when t h e committee of at




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least three shareholders examines a bank, savings bank,
or t r u s t company it takes account, among other things,
of overdrafts ( X X , 17).
XI.—PENALTIES.

The only particular penalty in t h e article on t r u s t companies is t h a t for refusal to report or for making a false
report; this is a misdemeanor on t h e p a r t of an officer
or director which entails a fine of not more t h a n $500,
imprisonment of from one to twelve months, or b o t h
( X I I , 11).
(For receipt of deposits while insolvent, see Banks, XI.)




346

MONTANA.
Except for a few penal provisions, and except for minor
changes effected by various chapters of the session laws of
1909, all the banking statutes of Montana are in a title at
page 1137 of the Revised Codes of 1907, entitled "Banks
and banking corporations." This title is divided into five
chapters: I. Banks of discount and deposit; II. Trust
deposit and security companies; III. Savings banks; IV.
Endowment and investment companies; V. Foreign
banking corporations; VI. Regulation of banking corporations. Of these, Chapter IV is not treated in the digest, and
Chapter V only very briefly. The provisions of Chapter
I are generally digested under the heading " Banks," those
of Chapter III under the heading " Savings banks," and
those of Chapter II under the heading "Trust companies."
Even this scheme can not be consistently followed, however, because despite the classification in the code a number of sections show by their language that the statutes
which form them were not designed to apply strictly to the
sort of corporation designated at the head of the chapter;
indeed the classification in the code, compared with the
language of the sections, shows many variances. Especially is the word " bank " frequently used in such a way as
to suggest that it is meant to include all three sorts of corporations: see 3993, where after speaking of ''any bank,
banking institution, or trust company" the section refers
to " such bank; " see also 3996. It is particularly difficult




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to tell, too, to what classes of corporations the provisions
of Chapter VI apply, composed as it is of various statutes
passed during different sessions, framed in varying terms.
Where, as is in several places the case, the code includes
contradictory sections, both are given, with a statement
showing which is based on more recent enactment. The
question in each case, which section is in force, should be
studied with reference to 3553 et seq., where there are
complicated rules for settling conflicts in the codes, and
with reference to the original enactments found in the
session laws. The language of each section has been followed in the digest so as to indicate its application as
clearly as may be. References, where they are simply
numbers in parenthesis, are to sections in the Revised
Codes of 1907.
BANKS.
I.—TERMS OF INCORPORATION.

The capital stock of a bank of discount and deposit
must be not less than $20,000, and must be paid into the
treasury of the bank in cash before business may be begun
(3909). Dividends may be declared by any " banking corporation" only from net earnings (3916). Before declaring a dividend a " banking corporation, trust deposit and
security company or savings bank" must set aside 10 per
cent of the net earnings available for dividends, as a surplus, until the fund amounts to 20 per cent of the capital
of the corporation (1909, chap. 112). They may be declared semiannually on the first Monday of January and

July (3997)-




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Montana
II.—LIABILITIES

—
AND

State

DUTIES

OF

Banks
STOCKHOLDERS

AND

DIRECTORS.

" T h e officers and stockholders of every banking corporation formed under the provisions of this title (see introductory paragraph under Montana for scope of t h e title
and its chapters) are individually liable for all debts contracted during t h e t e r m of their being officers or stockholders of such corporation equally and ratably to t h e
extent of their respective shares of stock in any such corporation, except t h a t when any stockholder shall sell and
transfer his stock such liability shall cease at the expiration
of six months from and after t h e date of such sale and
transfer " (3915). There is another provision, based on a
later act, making t h e stockholders "of every corporation
formed under this chapter or which m a y avail itself of its
provisions " individually liable " for all contracts, debts and
engagements of such corporation to the extent of t h e
a m o u n t of their stock therein a t t h e par value thereof in
addition to t h e a m o u n t invested in such s h a r e s " (4012).
Note t h a t t h e words " t h i s chapter," have been carried
over from t h e language of the session laws without readjustment to t h e code. The state examiner, F . H. Ray,
considers 4012 inoperative because " t h i s c h a p t e r " properly refers to chapter 190 of the laws of 1907, which did
n o t provide for t h e formation of corporations—a " c o r p o ration formed under this c h a p t e r " is, in Mr. R a y ' s opinion, an impossibility therefore. Attention is called, however, to the continuation of t h e quotation, above.
Every b a n k of discount and deposit must have not more
t h a n thirteen directors, who must be citizens of the United
States, and at least three of t h e m residents of Montana.
Each director must own at least ten shares of capital stock
(3912). After providing for reports by banks, savings
banks, a n d trust companies, the statutes go on t o provide




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t h a t if " any such b a n k " delays a report one m o n t h beyond
t h e time it is due or willfully violates any provisions of the
act relative t o reports, t h e directors are personally liable
for all t h e debts of t h e corporation contracted previous t o
and during t h e period of the neglect (4000).
III.—SUPERVISION.

The state examiner, an official appointed for terms of
four years, and charged with t h e d u t y of examining various public accounts, etc. (see 208 et seq.)y has supervisory
powers over banks, savings banks, and trust companies.
As state b a n k examiner he approves of increases in capital
stock of " a n y corporation organized under the provisions
of this t i t l e " (3918 and 4009), or, in the words of another
section, of " a n y banking association, trust, deposit and
security corporation, or savings b a n k organized under t h e
laws of this S t a t e " (4005 and 4009). When any " b a n k
organized under t h e provisions of this t i t l e " neglects t o
comply with an order within sixty days, or violates any of
the provisions of the title, he makes demand upon t h e
proper officer t o begin an action to annul the corporation's
existence (3919 and 4009). He passes upon voluntary
dissolutions of banks, savings banks, or trust companies
(4003); he approves of reductions of capital stock
(4006); he approves of reserve depositaries (4010); and
he notifies banks ("each bank organized under t h e provisions of this title") whose reserves have fallen below t h e
requirements, t o make good t h e deficiency (3921). All
information in reports to t h e state examiner is confidential and used only in furtherance of his official duties
(3999) • Whenever the examiner, after a full examination
of t h e affairs of a bank, savings bank, or trust company,
finds evidences of impairment or insolvency, he submits a
statement to t h e governor and attorney-general; and if
t h e y are satisfied t h a t t h e impairment or insolvency exists,




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Montana

—

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Banks

the attorney-general gives notice to have it m a d e good,
and upon failure sues for a receiver, pending whose appointm e n t the governor may direct the state examiner to take
charge of t h e business of t h e corporation (4004).
REPORTS.
Every bank, savings bank, and trust company must
make t o t h e state examiner not less t h a n four reports
a year a t his call, not less t h a n two months t o intervene
between calls, according t o the form prescribed b y him, and
containing a full abstract of the accounts of t h e bank, its
resources and liabilities, etc. The statement must be
transmitted to t h e examiner within five days after receipt
of his request and m u s t be published in condensed form in
a local newspaper. The examiner m a y call for special
reports when in his judgment they are necessary (3996).
Moreover, ' ' e v e r y such b a n k " must report to the state
examiner within ten days after declaring any dividend
showing the a m o u n t of t h e dividend and the a m o u n t of net
earnings in excess of it (3998). " Every corporation doing
a banking business in this State " must, besides keeping the
stockholders' book generally required, post in its office the
names of its directors and the number and value of shares
held b y each (3917). For reports required from " every
bank or banking association organized under the authority
of this S t a t e , " for purposes of taxation, see 2503.
EXAMINATIONS.

Proceedings for a receiver are only begun when evidences
of impairment or insolvency are found b y t h e state examiner " after a full and careful examination of t h e affairs " of
a bank, savings bank, or trust company (4004). T h e state
examiner makes a thorough examination of t h e affairs of a
bank, savings bank, or t r u s t company before he approves
of its voluntary dissolution (4003). I t is t h e d u t y of the




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s t a t e examiner once a year or oftener, without previous
notice, t o examine each bank, banking corporation, a n d
savings b a n k (the language of this s t a t u t e does not include
t r u s t companies, although it does investment and loan
companies) and examine their affairs, verify the value and
a m o u n t of their securities and assets, and inquire into
violations of law (209).
IV.—RESERVE

REQUIREMENTS.

" E a c h b a n k organized under t h e provisions of this
t i t l e " must keep in available funds a t least 20 per cent of
all immediate liabilities, of which reserve one-half m u s t
consist of balances due from solvent banks and one-half of
cash. When t h e reserve falls below t h e requirement, t h e
corporation m u s t not make any loans or discounts, except
b y buying or discounting sight exchange, nor m a k e dividends (3921). There is another section based on more
recent legislation t h a n t h e one just cited, which provides
t h a t " every b a n k " m u s t keep on h a n d a t least 15 per cent
of its total deposits, of which a portion, t o be determined
b y t h e directors, m a y be deposited in banks in cities of a
certain size approved as reserve banks b y t h e examiner,
a n d t h a t reserve banks must keep a t least 25 per cent of
total deposits in lawful money or deposited in other
reserve banks (4010). The state examiner considers t h e
second of the above two sections as the operative one.
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

Among powers of banks of discount and deposit is t h a t
of "loaning money on real and personal s e c u r i t y " (3911).
The total liability to " any b a n k incorporated under t h e
provisions of this t i t l e " of any person, company, or firm
for money borrowed, including in company or firm liabilities those of t h e members, m u s t never exceed 15 per cent
of the paid-in capital and permanent surplus of t h e bank,




35 2

Montana

—

State

Banks

b u t t h e discount of bills of exchange drawn against existing
values and of commercial paper owned b y t h e persons
negotiating it is not considered money borrowed (3920)".
There is a section, based on a later enactment, providing
t h a t t h e total liabilities of any person, firm, or corporation
t o " any b a n k " for money borrowed, including in firm, b u t
not corporation, liabilities, those of t h e members, m u s t
never exceed 20 per cent of capital and surplus; this
section excludes discount of bills and commercial paper as
above and loans on warehouse receipts and bills of lading,
from t h e classification of money borrowed (4011).
I t is unlawful for " a n y bank, banking institution, or
trust c o m p a n y " to loan to a managing officer without
taking ample security; and when such a loan or one made
to a director exceeds 10 per cent of the capital of t h e corporation, it m u s t be first approved by a majority of the
directors (3993).
VI.—INVESTMENTS.

Among powers of banks of discount and deposit are
those of buying and selling t h e bonds or stock of Montana
or of any other S t a t e or Territory, and t h e bonds of Mont a n a municipalities (3911).
Banks of discount and deposit m a y hold such real estate
as is necessary for t h e proper transaction of business; such
as is mortgaged t o secure previous loans; such as is conveyed to t h e corporation in satisfaction of previous debts;
and such as it purchases a t judicial sale under liens held
b y it (3913).
No bank of discount and deposit must hold any portion
of its own capital, or of t h e capital of any other incorporated company, unless the purchase is necessary to prevent
loss on a previous debt contracted on security which was
t h o u g h t adequate a t t h e time; and stock so purchased must
S. Doc. 353, 61-2




23

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Commission

not be held longer t h a n six months, if it can be sold for
what it cost or at par (3910).
X.—UNAUTHORIZED BANKING.

The chapter on foreign banking corporations forbids
t h e m t o do any banking business in Montana unless they
comply with various requirements of capitalization,
reserves, reports, limitations on liabilities, examinations,
etc. (3976 et seq.).
I t is unlawful to use the words " t r u s t " or " t r u s t comp a n y , " " s a v i n g , " or "savings b a n k " in the title of any
business unless t h e business is organized under t h e Mont a n a laws relating to trust, deposit and security, and savings b a n k corporations. Violations of this provision,
whether individually or as one interested in a firm or corporation, is a misdemeanor, punishable by fine of from
$300 t o $1,000, imprisonment for from sixty days to a year,
or b o t h (3992). This provision is inserted under Banks
because it appears in Chap. V I , "Regulation of B a n k s ; "
it seems to fall more properly under Savings banks and
under T r u s t companies.
XI.—PENALTIES.

Whenever any " b a n k organized under the provisions of
this t i t l e " fails to make good a depleted reserve within
t h i r t y days after notice, it is guilty of a misdemeanor punishable b y a fine of from $100 to $500 (3921). If " a n y
bank, banking institution, or trust c o m p a n y " loans to a
managing officer without ample security, or loans to a
managing officer or a director in an a m o u n t exceeding 10
per cent of the capital stock, without the approval of a
majority of the directors, the bank or any managing officer
of it violating the rule is liable to a fine of $1,000, and in
addition t h e officer m a y be imprisoned for from one to ten
years (3993 and 3994). After providing for reports from




354

Montana

—

State

Banks

banks, savings banks, and trust companies, t h e statutes
proceed to provide t h a t "if any such b a n k " fails to report
it suffers a penalty of $20 a day (4000). E v e r y officer or
other person who wilfully makes a false statement or entry,
with intent to deceive an examiner, reports falsely, etc., is
guilty of a felony, punishable b y imprisonment for from
one to ten years (4001).
The following three sections, all inserted in t h e code,
though 8715 is the latest enactment, seem inconsistent in
p a r t : Banks, savings banks, and trust companies are forbidden to receive deposits or transact other business after
they are insolvent, except t h a t they m a y act as trustee for
depositors, etc., keeping deposits thus made after the
insolvency separate from the general assets of t h e bank;
any officer, director, etc., knowingly receiving these trust
deposits except in t h e manner stated in the s t a t u t e is punishable b y a fine not to exceed $10,000, imprisonment not
to exceed five years, or both (4007). Any officer, agent,
or clerk of a bank, savings bank, or trust company who
receives deposits except in the separate trust manner just
explained, or who makes a false statement, etc., with intent
to deceive an examiner (this portion of 4008 seems in conflict with the later passed statute, 4001, above), is subject
to imprisonment for a term not exceeding fivo. years (4008).
No bank, banking house, etc., or p a r t y engaged in banking,
loan, or deposit business may accept a deposit if t h e bank
is unsafe and insolvent; any officer, director, etc., knowingly receiving such deposit is guilty of a felony, punishable
b y imprisonment for from one to twenty years (8715).
Whenever any provision of the banking laws as they
existed in 1907 is violated, for which no particular penalty
is provided, the violation is a misdemeanor (4014).




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SAVINGS BANKS.
I.—TERMS OF INCORPORATION.

Savings banks m u s t have a capital, fully paid in cash
before deposits are received, of not less t h a n $100,000; b u t
a savings b a n k m a y organize on a basis not exceeding
$500,000 capital stock, of which a t least $100,000 m u s t b e
paid in before deposits are received and t h e balance within
five years from incorporation, as called for b y t h e directors,
in amounts not exceeding 25 per cent of the unpaid capital
in a year (3946).
T h e directors "of each b a n k " (following a provision
applicable t o banks, savings banks, and trust companies)
m a y declare dividends semiannually on t h e first Monday of
J a n u a r y and July out of net profits (3997). E v e r y corporation organized under the savings-bank chapter was
required, under t h e provisions of t h e Code, t o set aside
annually at least 5 per cent of net profits as a contingent
fund until " s u c h s u r p l u s " amounted t o 20 per cent of
capital (3956). This has been changed, apparently, b y a
late s t a t u t e digested under Banks, I, t o require savings
b a n k s to carry to surplus, before each dividend is declared,
10 per cent of t h e a m o u n t available for dividends, until
t h e surplus equals 20 per cent of capital (1909, chap. 112).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

The officers a n d stockholders of every savings b a n k " are
individually liable for all debts contracted during t h e t e r m
of their being officers or stockholders of such corporation
equally and r a t a b l y t o the extent of their respective shares
of the stock in a n y such corporation, except t h a t when a n y
stockholder sells a n d transfers stock such liability ceases a t
t h e expiration of six m o n t h s from a n d after t h e d a t e of




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Banks

such sale and transfer " (3953; see also 3915). There is in
the code also the inconsistent provision in 4012, stated
under Banks.
There must be not more than thirteen directors, who must
be citizens of the United States, and at least three-fourths
of them residents of Montana. Each director must own at
least 10 shares of stock (3947). No director of a savings
bank may receive any pay until after whatever interest the
directors have determined to allow depositors has been
provided for (3952). There is also among the sections
requiring reports from banks, savings banks, and trust
companies the provision that if ''any such bank" delays a
report a month or willfully violates any other provision of
the statute on reports, the directors are personally liable
for all debts of the corporation contracted previous to and
during the period of the neglect (4000)
III.—SUPERVISION.

The digest of the statutes on this topic under Banks explains the application of the provisions that are there given.
It seems as though all the sections cited there applied
clearly to savings banks, including provisions for REPORTS
and EXAMINATIONS. There is, besides, this section in the
savings-bank chapter; the books of every savings bank
must be open at all times to inspection by the auditor, or
other persons designated by the legislature or the auditor.
Every savings bank must report to the auditor its condition on the first Monday of January, April, July, and
October, and at such other times as the auditor may call
for reports, showing liabilities and assets, loans on mortgages, on collateral, and on personal securities; bonds and
stocks; deposits in banks; and cash on hand (3955). Note,
however, that a section passed in 1907, transfers all the
auditor's duties under banking laws to the state examiner
(4009).




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IV.—RESERVE REQUIREMENTS.

See Banks, IV. The provisions of 3921 extend over
all b a n k s organized under t h e provision of t h e title, clearly
including savings b a n k s ; t h e language of 4010 is simply
" every b a n k . ' '
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

T h e provisions for limit on t h e a m o u n t of money to b e
borrowed b y one person, firm, or corporation given under
this head in Banks apply here; there is t h e same conflict
between 3920, applicable t o all b a n k s created under t h e
title, a n d 4011, applicable in its terms t o " a n y b a n k . "
See also t h e provision of t h e savings-bank chapter t h a t no
loan on personal security m a y be m a d e t o a n y one person
or firm t o a n a m o u n t exceeding $10,000 (3951).
See Banks, V, also for the prohibition upon loans t o
managing officers without ample security, a n d loans t o
managing officers or directors without t h e approval of a
majority of t h e directors; this section applies t o " a n y
bank, banking institution, or t r u s t c o m p a n y " (3993),
and, though more recent, is thought, under t h e quoted
language, not to override t h e provision in t h e savings-bank
chapter t h a t no director, officer, or servant of a savings
b a n k m a y borrow t h e funds or deposits of t h e corporation
or in a n y way use t h e m in his private affairs (3952).
(See also VI, below.)
VI.—INVESTMENTS.

A savings b a n k m a y hold such real estate as is necessary for t h e proper transaction of its business, n o t to exceed
$150,000 in value; such as is mortgaged to it; and such as
is purchased a t sale on j u d g m e n t or decree rendered for
money so loaned. A savings b a n k m u s t not deal in per-




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Companies

sonal property except such as is necessary for t h e transaction of its business and such as it takes as security (3954).
At least one-half of the capital paid in and one-half of
all deposits m u s t be invested in United States securities,
securities of some State, or securities of Montana municipalities on which interest is paid, or loaned on unincumbered realty worth a t least double t h e loan. The remainder
may be invested thus or on approved personal security,
b u t no loan m u s t be made on personal security of less t h a n
two responsible persons or collateral to be approved by
the directors (3951). A savings b a n k m a y deposit cash
on h a n d in a b a n k or trust company in Montana, b u t not
more t h a n $50,000 m a y be deposited with a n y one corporation (3958).
VII.—OVERDRAFTS.

There is a penal provision t h a t every officer, teller, or
clerk of a savings b a n k who knowingly overdraws his
account and obtains t h e funds is guilty of a misdemeanor
(8714).
X.—UNAUTHORIZED BANKING.

(See Banks, X.)
XI.—PENALTIES.

T h e provisions under this heading seem t o be t h e same
as those under Banks, X I , adding only t h e penal provisions against overdrafts by savings b a n k s ' officers given
above under V I I .
T R U S T COMPANIES.
I . — T E R M S OF INCORPORATION.

Trust companies are given power to "receive money
from a n y person or persons, corporation, or company,




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on deposit, at such rate of interest and for such time as
may be agreed upon, for the purpose of loaning and investing the same" (3927); and they may be formed to "hold
money on deposit payable, either on time or on demand,
with or without interest'' (3937).
The amount of capital stock of a trust company must
be not less than $100,000 nor more than $500,000, divided
into shares of $100 each; $100,000 must be subscribed
and paid in cash before the corporation may begin business (3924 and 3936). A later section provides that the
authorized capital stock shall not be more than $10,000,000
(3938). One-half the capital must be stated, in the preliminary papers, to have been paid in in lawful money
(3936).
Dividends of the profits may be declared every six
months or oftener, but not while the company is insolvent nor so as to make it insolvent (3939). Before declaring a dividend 10 per cent of the amount available must
be carried to surplus, until surplus equals 20 per cent of
capital (1909, chap. 112). The provisions of 3997 (see
Banks, I) may apply; that section, following one applicable to banks, savings banks, and trust companies, allows
the directors of "each bank" to declare dividends semiannually, on the first Monday of January and July, out
of net profits.
II.—LIABILITIES

AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

The stockholders of every trust company are individually liable for all debts contracted during the time of
their being stockholders to the extent of the shares held
by them at the time the debts were contracted (3934).
See, however, 4012, the application of which has been
discussed under II in Banks.




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—

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Companies

There must be not fewer than three nor more than
twenty-five directors, all of them stockholders and a majority citizens of Montana (3926 and 3938). If the directors
knowingly declare a dividend when the corporation is
insolvent, or such dividends as will render it insolvent,
they are liable for the debts, then existing, and contracted
later while they continue in office (3939). For the possible application to trust companies of the section making
directors liable for debts contracted while a report is overdue, see the quoted language under Banks, II (4000);
the state examiner considers this section inapplicable to
trust companies. Directors must make statements of
the affairs of the corporation to exhibit to the stockholders at least once a year (3940).
III.—SUPERVISION.

See III under Banks, where the language of the various
sections is indicated to show the extent of the application of each one. All sections there given on supervision,
REPORTS, and EXAMINATIONS seem to include trust companies, except, perhaps, those which cover " all banks organized under the title.'' Trust companies, although undoubtedly organized under the title, may not be banks organized under the title. There is this section on supervision
in the trust company chapter: The books and records of
a trust company are open to examination by the auditor
of the State or such persons as he or the legislature designate. Each trust company reports its condition to the
auditor on the first Monday of January, April, July, and
October and at such other times as he desires, showing
liabilities and assets; loans on mortgages, on collateral,
and on personal security; bonds and stocks; deposits; and
cash on hand (3940). Note, however, that a section
passed in 1907 transfers all the duties of the auditor,




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" u n d e r t h e laws regulating the business of b a n k i n g , " to
t h e S t a t e examiner (4009).
IV.—RESERVE

REQUIREMENTS.

See Banks, I V ; it is questionable if these sections apply
t o t r u s t companies, though it m a y well be t h a t t h e language of 3921, " e a c h b a n k organized under t h e provisions of this title," m a y extend to t r u s t companies. I t is
more doubtful still if 4010, providing for the reserves of
" e v e r y b a n k , " applies to trust companies.
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

See Banks, V, for t h e provisions restricting t h e a m o u n t
of loans to one person, firm, or corporation; one of t h e
sections there given applies to all banks created under
t h e title (3920), t h e other to all banks (4011); it is questionable if either of these, especially the latter, applies
to t r u s t companies. I t is unlawful for a n y b a n k or t r u s t
company to loan to any managing officer of " s u c h b a n k "
without ample security, and when the loan or a loan to
a director exceeds 10 per cent of t h e capital it m u s t be
approved by a majority of directors (3993).
VI.—INVESTMENTS.

A t r u s t company m a y hold all such real a n d personal
property as is necessary to carry on its authorized business, as well as such as it deems it necessary to acquire in
t h e enforcement or settlement of demands (3928). Another section provides t h a t a t r u s t company m a y own only
such real estate as is acquired for the transaction of its
business a n d in t h e enforcement and collection of debts
a n d liabilities due it (3939). T h e directors are authorized
t o invest t h e capital " i n good securities;" it is lawful for
a t r u s t company to invest capital and funds in mortgages




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—

Trust

Companies

of unincumbered realty in Montana, in stocks or bonds of
Montana or a n y other State, and in bonds of any Montana
municipality (3930).
X . — U N A U T H O R I Z E D T R U S T COMPANY B U S I N E S S .

(See Banks, X.)
XI.—PENALTIES.

See Banks, X I ; t h e language of each section is there
quoted with sufficient accuracy to suggest the application
as far as t h e section itself does.




363

NEBRASKA.
All the statutes of Nebraska dealing with banks, savings
banks, and trust companies in force before the session of
the legislature of 1909 were contained in Chapter 8, at
page 1617, of the compiled statutes of Nebraska, 1907.
This chapter was repealed by an act passed at the 1909
session, printed at page 66 of the session laws of Nebraska
for 1909, which enacts a complete new statute on the
subject of banking. Most of this statute applies to
"banks," which term is defined to mean "any incorporated banking institution;" the term "commercial bank"
is defined to mean " any such banking institution as shall,
in addition to the exercise of other powers, follow the
practice of repaying deposits upon check, draft, or order,
and of making commercial loans chiefly;" the term "savings bank" is defined to mean "any such banking institutions as shall, in addition to the exercise of other powers,
follow the practice of repaying deposits only upon the
presentation of pass books, and whose loans are chiefly
made on real-estate security" (3). Trust companies are
not legislated for particularly unless they are within the
definition "incorporated banking institution." The statute applies for the most part to commercial banks and
savings banks indiscriminately; the particular matters in
which savings banks are legislated for separately are given
under that heading in the digest, and of course override,
with respect to savings banks, inconsistent provisions
given under " Banks;" on all other matters, however, sav-




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Banks

ings banks must be taken to be subject to the rules which
govern banks. References in the digest are to sections in
chapter 10 of 1909.
BANKS.
I . — T E R M S OF INCORPORATION.

The language of t h e quotations given in t h e preliminary
paragraph above seems t o imply t h a t commercial banking
and savings banking m a y be combined (3); b u t every
corporation a t its organization must in its statement
declare " t h e n a t u r e of proposed banking business, whether
commercial or s a v i n g s " (15).
The capital required of commercial banks is as follows:
I n no case less t h a n $10,000; if t h e bank is located in a
village or town of from 100 to 500 inhabitants, not less
t h a n $15,000; in a town or village of 500 to 1,000, not less
t h a n $20,000; in a town or village of 1,000 to 2,000, not
less t h a n $25,000; in a city or village of 2,000 to 5,000,
not less t h a n $35,000; in a city of 5,000 to 25,000, not
less t h a n $50,000; in a city of 25,000 t o 100,000, not less
t h a n $100,000; in a city of 100,000 or more, not less t h a n
$200,000. The provisions giving t h e form in which capital
m a y be paid in at organization are given under Savings
Banks, although t h e wording of t h e s t a t u t e permits of the
interpretation t h a t these provisions apply to commercial
banks as well (13). Before organizing, each b a n k files an
oath t h a t " t h e capital stock has been paid in as provided
for." The state banking board m u s t satisfy itself t h a t
t h e incorporators are persons of integrity and responsibility (16).
No b a n k m a y withdraw capital in dividends or otherwise (34). Dividends m a y be declared semiannually of
so much of net profits as seems expedient, b u t before t h e
declaration the b a n k must carry one-fifth of net profits




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to surplus fund, until the surplus amounts to 20 per cent
of the paid-up capital (28).
II.—LIABILITIES

AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

It is a constitutional provision that " every stockholder
in a banking corporation or institution" is individually
liable over and above the amount of stock held, to an
amount equal to his shares, for all liabilities accruing while
he remains a stockholder (Annotated Statutes, Cobbey,
1907, sec. 650). The banking statute provides for this
liability, and adds that if a stockholder transfers his shares
knowing the bank to be insolvent, he continues liable (35).
Another section empowers directors " t o levy and collect
assessments on the stock of the banking corporation for
the purpose of repairing and restoring the credit of said
banking corporation, or to repair and restore any deficiency that may occur by reason of the impairment of the
capital stock of said bank" (50).
There must be from three to fifteen directors, who must
be stockholders (26), and a majority of them residents of
the county where the bank is located, or adjacent counties; every director of a bank capitalized at $50,000 or
less must own 4 per cent of paid-up capital, and of a
bank capitalized at more than $50,000 must own not less
than $3,000 of paid-up stock (12). The board of each
bank must meet at least twice annually for a thorough
examination of the books, records, funds, and securities
of the bank; a certified copy of this record is sent to the
state banking board (26).
III.—SUPERVISION.

The state banking board of Nebraska consists of the
governor, who is ex officio chairman, the auditor of public
accounts, and the attorney-general (5). The governor




366

Nebraska

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Banks

appoints a secretary of the banking board, who must be
an elector of the State and have had three years' practical
experience in banking. His salary is $3,000 per year, and
the clerk's salary is $1,500. The governor also appoints
examiners, who must have had three years' experience in
banking, and who may not have a personal interest in
any bank they examine, nor be nor have been within a
year preceding their appointment, officers or employees
of banks they examine (6). The state banking board,
before granting charters, satisfy themselves that the
incorporators of the bank in question are persons of integrity and responsibility (16). The banking board approves
all reductions and increases in capital stock, and grants
consents to voluntary liquidations (34 and 42) and consolidations (41). They approve reserve depositaries (13
and 22).
Any corporation which conducts a banking business
without complying with the statute of 1909 may be put
into the hands of a receiver (2). When reserves fall below
the required amount or capital is impaired, the state
banking board may notify the bank in question to make
good the deficiency; if this is not done within the time
directed, a receiver may be appointed (23). If a bank
takes its own stock and does not dispose of it within six
months, a receiver may be appointed (25). If it appears
to the banking board from an examination or report that
the capital of a bank is impaired, or that the bank is conducting its business in an unsafe or unauthorized manner,
or endangering the interests of depositors, or if the bank
fails to report or to comply with the statute in any other
respect, the banking board institutes through the attorneygeneral a suit for the appointment of a receiver (48). Any
bank examiner, when ordered by the board, may take and
hold possession of a bank for a time sufficient to make a
thorough examination of its condition, and if it is found




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Commission

to be insolvent, or to be conducting its business unsafely,
or to be endangering the interests of depositors, then the
examiner may hold possession of all the assets of the bank
until the board can receive his report, and by proper proceedings institute a receivership (10). A bank may voluntarily place its affairs under control of the board by
posting a notice on its door (43). After the banking
board, a bank examiner, or receiver has held possession of
a bank, the stockholders may place it again in condition
to do a banking business, whereupon the board issues
permission for a reopening in the same manner as it originally granted permission to begin business (50). The
banking board has authority to draw upon the depositors'
guaranty fund in amounts required to pay claims of depositors in an insolvent bank; see XII, infra (52). The
authority of a bank examiner, when ordered by the banking board, or a receiver appointed under the act, to take
and hold possession of all assets of a bank is provided for,
together with their fees (55). If a bank refuses to deliver
possession of its assets to the board or its agent, the board
communicates with a state's attorney, who applies to
court for an order placing the board or its agent in
charge (56).
REPORTS.

It is a constitutional provision that "all banking corporations" must publish a quarterly statement of their
assets and liabilities (Annotated Statutes, Cobbey, 1907,
sec. 650). This is taken care of in the banking act by the
requirement that every bank make to the banking board
not less than four reports each year in the form prescribed
by the board (17), including the following items: Amount
loaned on bonds and mortgages; amount loaned on notes,
bills of exchange, overdrafts and other personal securities,
with values of securities; amount of rediscounts and of




368

Nebraska

—

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Banks

past-due paper; real-estate investments with cost; cash
on hand and on deposit, with names of depositaries and
amounts; all other assets; and other information required
by the board. Each report states resources and liabilities
at the close of business on a past day specified by the
board, and must be transmitted to the board within five
days after receipt of request. A summary of the report
is published in a local newspaper (18). Special reports
may be called for by the board (19). Receivers must
make monthly reports to the banking board (58). Statements of average daily deposits are required semiannually
to ascertain the bank's contribution to the depositors'
guaranty fund; see infra (45). After each semiannual
meeting of the board of directors of a bank they forward
to the banking board within ten days a certified copy of
the record of their examination into the bank's affairs (26).
After each examination by an examiner he reports the
condition of the examined bank to the board (8). A list
of the names and residences of stockholders, shares held
by each, and amount of paid-up capital represented by
the shares must be kept subject to inspection by stockholders and creditors (38).
For reports required for purposes of taxation, see Annotated Statutes, Cobbey, 1907, section 10955, a n d f° r
those required of state depositaries, ibid., section 11366.
EXAMINATIONS.

The affairs of every bank are examined as often as the
banking board think necessary, at least semiannually.
No examiner may examine a bank in which he has a personal interest, nor one in which he is or has been within a
year of his appointment an officer or employee (6). A
bank examiner, when ordered by the board, may take
possession of a bank for a long enough time to make a
thorough examination into its condition, preparatory to
S. Doc. 353, 61-2




24

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Monetary

Commission

the institution of proceedings for a receiver, if they prove
necessary (10). The state banking board may, if they
deem it advisable, order special examinations before
allowing voluntary liquidations (34); another section
seems to make this examination a prerequisite to every
voluntary dissolution (42). The state banking board
makes careful investigation of the affairs of a bank in the
hands of a receiver before allowing it to resume business
(50). The board of directors of every bank make a
thorough examination of its records and funds at each
semiannual meeting (26).
IV.—RESERVE REQUIREMENTS.

In cities of less than 25,000 every bank must keep a
15 per cent reserve, of which two-fifths must be in cash
and the rest may be deposited in depositaries approved by
the state banking board. In cities of over 25,000 the
reserves must be 20 per cent of aggregate deposits, of
which two-fifths are kept in cash and the rest, if desired,
in approved depositaries (22). When the reserves fall
below the requirement, a bank may make no new loans
or discounts, except by discounting or purchasing sight
exchange, nor may it declare dividends, until the reserve
is restored (23).
V.—DISCOUNT AND LOAN RESTRICTIONS.

"The aggregate amount of the rediscounts and bills
payable of any corporation transacting a banking business in this State shall at no time exceed two-thirds of its
paid-up capital except for payment of its depositors;"
nor may any commercial bank permit loans and investments, exclusive of reserve and banking house and fixtures, to exceed eight times capital and surplus (24). No
officer, except a director who is not an officer, and no em-




370

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—

State

Banks

ployee of any bank, may borrow the funds of the bank;
no director may borrow without the approval of the
board of directors (32). No bank may loan to any single
corporation, firm, or individual, ' 'including in such loan
all loans made to the several members or shareholders of
such firm or corporation, for the use and benefit of such
firm, corporation, or individual," more than 20 per cent of
paid-up capital and surplus, but the discount of bills of
exchange drawn against existing values, and of commercial paper owned by the persons negotiating it, is not considered money borrowed. The total liabilities of the
stockholders of a bank to the bank must never exceed
50 per cent of paid-in capital and surplus (33).
"No corporation transacting a banking business shall
make any loan or discount on the security of the shares
of its own capital stock, nor be the purchaser or holder of
any such shares, or the shares of any corporation, unless
such security or purchase shall be necessary to prevent
loss upon a debt previously contracted in good faith; and
such stock so purchased or acquired shall within six
months from the time of its purchase be sold or disposed
of at public or private sale; or in default thereof a receiver may be appointed to close up the business of the
bank. Provided, that in no case shall the amount of
stock so held exceed 10 per cent of the paid-up capital
of such bank " (25).
No bank may pay interest on deposits at a greater rate
than 4 per cent a year (27).
VI.—INVESTMENTS.

A bank may hold real estate only for the following purposes: Such as is necessary for the convenient transaction of its business, not exceeding one-third of paid-up
capital; such as is conveyed to the bank for debts, and




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such as it purchases a t sale under judgment on its securities, b u t t h e b a n k m u s t not bid a larger a m o u n t t h a n is
necessary to satisfy the debts. Real estate acquired in
satisfaction of debts or at judgment sale m u s t n o t be held
longer t h a n five years and t h i r t y days; a t no time m a y
t h e total a m o u n t of real estate held for any purpose
exceed 50 per cent of paid-up capital (29).
The somewhat confusing section on purchase by a b a n k
of shares of its own stock or of t h a t of any corporation is
quoted under V, supra (25).
VII.—OVERDRAFTS.

T h e only mention of overdrafts is in t h e section on
reports, which includes overdrafts as one item required t o
be reported (18).
X.—UNAUTHORIZED BANKING.

I t is unlawful to transact >a banking business in
Nebraska except b y means of a corporation organized for
t h e purpose under Nebraska law. No corporation m a y
receive money on deposit or prosecute a banking business
until it has complied with t h e provisions of t h e s t a t u t e of
1909. The penalty for violation of these prohibitions is
$25 a day and t h e appointment of a receiver to wind u p
t h e business of t h e offender (2). A later section of t h e
s t a t u t e declares t h e penalty for transacting a banking
business without having obtained a charter and certificate to be $50 a day (20). I t is reiterated t h a t no person
or persons, exclusive of national banks, are permitted to
prosecute a banking business in Nebraska except corporations t h a t have complied with t h e provisions of t h e
s t a t u t e of 1909 (5). I t is unlawful t o transact a banking
business without obtaining a charter from t h e state banking board (11).




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Banks

XL—PENALTIES.

Any corporation failing to report, or transacting a banking business without first obtaining a charter and a certificate t h a t t h e corporation has complied with t h e deposit
guaranty law (see also X , supra), suffers a penalty of $50 a
day (20). Any person who knowingly subscribes t o a false
report or false entry, or exhibits false papers with intent t o
deceive an examiner, is guilty of a felony punishable by
imprisonment for from one to ten years (21). Any person
who makes false oath to any statement required in the
reports of average daily deposits on which assessments for
the deposit g u a r a n t y fund, is guilty of a felony punishable
by a fine of from $100 to $1,000, or imprisonment of from
one to five years, or b o t h fine and imprisonment (45).
Any examiner who willfully makes a false report with
intent to aid in t h e operation of an insolvent bank, or who
receives a bribe to induce him not to file t h e report of an
examination, or who neglects to examine on account of
having received a bribe, is guilty of a felony punishable by
imprisonment from two to ten years (8).
Any officer, director, or employee who pays interest on
deposits at a greater rate t h a n 4 per cent, commits a felony
punishable by a fine of from $100 to $500, or imprisonment
not to exceed three years ,or both (27). Any officer, agent,
or employee knowingly aiding in t h e receipt of a deposit
after insolvency is guilty of a felony punishable b y imprisonment for from one t o ten years (30). Any officer, director, or employee who is implicated in t h e violation of the
section forbidding officers to borrow, and directors to borrow without t h e approval of t h e board, is guilty of a felony
punishable b y a fine not to exceed $1,000, or imprisonment
not t o exceed five years, or b o t h (32); any officer, director,
or employee who permits a violation of t h e section forbidding loans t o any individual to exceed 20 per cent of paid




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Commission

u p capital and surplus, is punishable b y a fine not t o exceed
$500 (33): t h e two offenses just named also render t h e
guilty officer or employee personally liable for loss resulting
t o t h e b a n k (40). A violation of t h e section requiring t h e
president and cashier t o keep, subject to t h e inspection of
stockholders and creditors, a list of t h e names and residences of stockholders, etc., is punishable by a fine of from
$50 t o $200, or imprisonment for from thirty to sixty days,
or b o t h (38). I t is unlawful for an officer or employee t o
certify a check drawn upon t h e b a n k unless the drawer has
on deposit an a m o u n t of credit equal to the face of t h e
check; on being certified, t h e a m o u n t of the check m u s t be
immediately charged against t h e account of the drawer (39).
T h e banking board may pay rewards not exceeding in
a n y case $500, out of t h e depositors' guaranty fund, for t h e
apprehension of persons violating the s t a t u t e of 1909 (60).
Where no other punishment is provided, any breach of
t h e s t a t u t e is a misdemeanor, punishable b y fine of $25 t o
$300, imprisonment for thirty to ninety days, or b o t h (61).
T h e printing or engraving of a false statement t h a t a
b a n k has taken advantage of t h e depositors' g u a r a n t y law
is declared to be a violation of t h e act (14).
X I I . — D E P O S I T O R S ' GUARANTY SYSTEM.

All banks are subject to assessment for a g u a r a n t y fund
for t h e protection of depositors (44). On J u n e i s t a n d
December i s t of each year every b a n k files with t h e banking board a s t a t e m e n t showing average daily deposits for
t h e preceding six months, exclusive of public money otherwise secured. A m o n t h after t h e reports are filed t h e state
banking board levies assessments against t h e capital stock
of each bank as follows: * Within sixty days after t h e taking
effect of t h e 1909 s t a t u t e (effective July 2, 1909), onefourth of 1 per cent of average daily deposits; on J a n u a r y 1,




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—

State

Banks

1910, one-fourth of 1 per cent of t h e average daily deposits
for t h e six months preceding December 1, 1909; on July 1,
1910, one-fourth of 1 per cent of t h e average daily deposits
for t h e six months preceding J u n e 1, 1910; on J a n u a r y 1,
1911, one-fourth of 1 per cent of t h e average daily deposits
for t h e six months preceding December 1, 1910; and on
July 1st and J a n u a r y 1st of each subsequent year, onetwentieth of 1 per cent of t h e average daily deposits for the
six months ending on each preceding J u n e 1st and December 1st (45). Banks organized after t h e act of 1909 took
effect p a y 4 per cent on t h e a m o u n t of t h e capital, when
t h e b a n k opens for business, this fund to be subject to
adjustment on t h e basis of average daily deposits as shown
by its first two semiannual statements. The board has
power to adjust rates of assessments of these new banks so
as t o require each b a n k to contribute an equitable sum to
t h e fund; and its first two assessments, together with its 4
per cent of capital originally contributed, m u s t equal at
least 1. per cent of daily deposits, as shown b y t h e first two
semiannual statements (45a).
Banks are notified of t h e a m o u n t of assessments b y t h e
banking board, whereupon they must at once set a p a r t the
a m o u n t of t h e levy, which they keep as a depositors' guara n t y fund payable t o the board on demand (46). If the
depositors' g u a r a n t y fund before July 1, 1910, becomes
reduced to an a m o u n t less t h a n one-half of 1 per cent of
average daily deposits, or subsequent to July 1, 1910, to an
a m o u n t less t h a n 1 per cent of average daily deposits, t h e
board must levy a special assessment t o cover t h e deficiency ; special assessments must be based on average daily
deposits, and, when required for t h e immediate p a y m e n t
of depositors, m a y be for any amount not exceeding 1 per
cent of average daily deposits in any one year (47).
After t h e board, an examiner, or a receiver has had possession of a bank, its stockholders m a y replace it in con-




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dition to do business, but it may not reopen until the
board, after investigation, is of opinion that its funds
are wholly restored and that all advances, if any have
been made, from the depositors' guaranty fund are fully
repaid with interest (50). Claims of depositors for deposits and claims of holders of exchange have priority in
insolvency over all other claims except those for taxes;
they are paid immediately out of the available cash in the
hands of the receiver. If the cash in the hands of the
receiver is insufficient to pay depositors, the court in
which the receivership proceedings are had certifies to the
state banking board the amount required to supply the
deficiency; the board thereupon draws against the depositors' guaranty fund to the amount required and transmits
to the receiver these funds, which he applies to pay depositors; but the fund is not available to pay depositors
in banks which have not complied with the depositors'
guaranty sections of the statute. These drafts against
the fund are prorated among the solvent banks in which
the fund is kept, in accordance with the amount held by
these solvent banks (52). To the extent of the amount
paid from the guaranty fund to satisfy claims of creditors,
the banking board, for the benefit of the fund, is subrogated
to the rights of "creditors" (are "depositors" meant?)
thus paid to participate in the assets of the bank; whatever is realized by the receiver through this subrogation
is deposited for the fund in the solvent banks proportionately to the assessments levied against these banks (53).
SAVINGS BANKS.
Savings banks—that is, "such banking institutions as
shall, in addition to the exercise of other powers, follow
the practice of repaying deposits only upon presentation
of pass books, and whose loans are chiefly made on real




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Savings

Banks

estate security " (3)—are, except as noted below, subject t o
t h e rules given under banks. The fact t h a t on beginning
business a b a n k m u s t state " t h e n a t u r e of proposed banking business, whether commercial or savings," m a y imply
a prohibition on combining commercial and savings banking in the same institution (15).
CAPITAL.

The minimum paid u p capital of a savings b a n k is
$15,000; in cities of from 50,000 to 100,000, t h e minimum
paid u p capital is $35,000; in cities of 100,000 or more t h e
minimum paid u p capital is $75,000. This paid u p capital
must consist, a t t h e time, of lawful money carried with
depositary banks approved b y t h e banking board, or of
national, state, county or municipal bonds, b a n k furniture,
and necessary building and lots on which t h e building is
situated, free from incumbrance; t h e bonds m u s t n o t constitute more t h a n one-half, nor t h e building, lots, furniture,
and fixtures more t h a n one-third of t h e paid in capital,
nor the furniture and fixtures more t h a n one-tenth.
T h e wording of this paragraph admits possibly of t h e interpretation t h a t these limitations on t h e form of capital
apply to commercial banks as well as savings banks (13).
DIRECTORS.
The ownership of five shares of t h e capital stock of a
savings b a n k qualifies one t o be a director (12).
RESERVES.
T h e section which provides t h a t every b a n k in cities of
less t h a n 25,000 m u s t keep a reserve of 15 per cent of deposits, two-fifths in cash, and in cities of more t h a n 25,000
20 per cent of deposits, two-fifths in cash, proceeds: " P r o -




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vided further, T h a t savings banks shall have on h a n d a t
all times as a reserve in available funds an amount equal t o
a t least 5 per cent of their aggregate deposits " (22).
LOANS AND INVESTMENTS.

Savings banks are exempted from the requirement
t h a t loans and investments, exclusive of reserve, banking house and fixtures, must not exceed eight times
capital and surplus (24). The provisions of the section
forbidding loans to a single firm, corporation, or individual in excess of 20 per cent of capital stock and surplus (see Banks, V) do not apply to the securities of
savings banks enumerated in section 36 of the s t a t u t e
(33). The section named provides t h a t t h e loanable
funds of a savings bank, except its reserves, must be
invested in bonds of the United States, or of any State,
or of any municipality in the United States, or, when
approved by the state banking board, in other bonds of
known marketable value; or loaned on negotiable paper
secured b y t h e above-named securities; or loaned upon
unencumbered real estate (second-mortgage loans m a y
be made on improved farm lands, b u t no loans m a y be
m a d e on these lands or other real estate "which, including t h e aggregate amount of incumbrance thereon, shall
exceed 50 per cent of the cash value t h e r e o f " ) ; or loaned
upon notes secured by collateral security of known
marketable value; or held in cash; or deposited in good
solvent banks. Chattel mortgages may not be taken
b y savings banks as collateral (36). Savings banks are
not subject t o t h e restrictions (see Banks, V) upon holding real estate (29). Pass books are provided for; a
savings bank m a y issue certificates for legitimate deposits, however (37).




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— Trust

Companies

PENALTIES.
Since t h e provision forbidding loans to an individual
in excess of 20 per cent of capital and surplus does not
apply to t h e enumerated securities of savings banks,
the penalty upon officers or employees who loan in
excess of 20 per cent is in so far inapplicable t o savings
banks (33).

TRUST COMPANIES.
There is no separate legislation for trust companies;
if they transacted a banking business, they might be
within the term " b a n k , " which is defined to mean " a n y
incorporated banking institution," or even within the
term "commercial b a n k , " which is defined to mean " a n y
such banking institution as shall, in addition to the
exercise of other powers, follow the practice of repaying
deposits upon check, draft, or order and of making commercial loans chiefly" (3). Practically all t h e provisions
of the 1909 s t a t u t e apply to " e v e r y corporation transacting a banking business under t h e laws of this State
or under t h e provisions of this a c t . " The compiler has
been assured, however, b y E. Royse, esq., secretary of
t h e state banking board, in a letter dated March 24, 1909,
t h a t trust companies in Nebraska do not do a banking
business.




379

NEVADA.
T h e digest of the statutes of this State is based upon
t h e pamphlet issued by t h e state banking board in 1909,
which contains t h e three statutes under which banking is
conducted. Most of t h e banking legislation is contained
in t h e s t a t u t e at page 251 of t h e laws of 1909, Chapter
CXCI of t h a t year; references in t h e digest, where they
are simply numbers in parentheses, are to sections in t h a t
act. The other two important statutes, Chapter X C I I
of 1909 (p. 95), and Chapter C L X V I of 1907 (p. 362), are
each cited b y the year, the page on which t h e s t a t u t e
begins, and t h e section. These statutes apply, except
where the language is quoted, indiscriminately t o banks,
savings banks, and trust companies; the act a t page 251
of 1909, indeed, defines " b a n k , " as used in t h a t act, t o
include banks, savings banks, and trust companies, and
extends its provisions t o all "individuals, firms, and corporations of any character conducting t h e business of
receiving money on deposit or otherwise acting in t h e
capacity of a b a n k " (60). I t must be borne in mind
therefore, t h a t the provisions digested under " B a n k s "
are applicable also to savings banks and t r u s t companies.
An old savings bank statute, Chapter X C I I I of 1869, w a s
not thought sufficiently i m p o r t a n t to deserve a place in
t h e latest compilation of the statutes of Nevada, issued in
1900, and on the suggestion of the state banking board,
who took counsel of the attorney-general of t h e State on
t h e question, it has been omitted from the digest.




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Nevada

—

S t a t e

Banks

BANKS.
I . — T E R M S OF INCORPORATION.

The statutes do not expressly allow, and, indeed, may
be said by implication to forbid, t h e combination of commercial and savings banking. A bank before beginning
business m u s t m a k e a statement t o t h e banking board,
setting out, among other things, " t h e n a t u r e of t h e proposed banking business, whether commercial or s a v i n g s "
(16); a corporation m a y be formed "for the transaction
of a general banking business, or for t h e purpose of aggregating t h e funds of t h e savings of t h e members thereof
and others and preserving and safely investing t h e same
for their common benefit" (1907, p . 362, 1).
" T h e paid-up capital stock required to entitle a corporation to a license" t o do a banking business must be as
follows: I n no case less t h a n $10,000; in a village or town
with from 100 t o 500 inhabitants, $15,000; in a village
or town of from 500 t o 1,000, $20,000; in a village or
town of from 1,000 t o 2,000, $25,000; in a city or village
of 2,000 to 5,000, $35,000; in a city of 5,000 to 20,000,
$50,000. " T h e entire capital stock shall be subscribed,
and at least 80 per cent thereof paid in, before such
license shall be issued * * * ; and such paid-in capital, including t h e initial and subsequent payments, shall
consist at the time of" money, deposits, national, state,
or municipal bonds, bank furniture, building, and t h e lots
on which t h e building is situated, free from incumbrance;
t h e public bonds mentioned must not constitute more
t h a n one-half, nor t h e building and lots, with furniture
and fixtures, more t h a n one-third, of the paid-in capital,
nor the furniture and fixtures more t h a n one-tenth (14).
Under t h e previous statute, only 50 per cent of capital
h a d t o be subscribed, and 50 per cent of the subscriptions
paid in in money (1907, p. 362, 3); " t h e balance of t h e




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etary

Commission

capital stock remaining unpaid shall be paid in within
two y e a r s " after the bank receives its certificate of incorporation (1907, p . 362, 4 ) : although the 1909 s t a t u t e
clearly overrides these provisions with respect t o t h e
a m o u n t of capital required t o be subscribed and paid in
a t t h e time of incorporation, t h e quoted requirement t h a t
t h e balance be paid in within two years m a y still be in
effect.
Any corporation transacting a banking business m a y
semiannually declare a dividend out of net profits, but
before the dividend is declared one-tenth of net profits
m u s t be carried t o surplus until it amounts t o 20 per cent
of paid-up capital (28). Capital must never be withdrawn, either in the form of dividends or otherwise.
Dividends m a y be declared only out of net profits (35).
For limit on borrowing by a bank, see V, infra.
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

There is no legislation on stockholders' liability; the
constitution of Nevada provides t h a t stockholders in corporations are not to be individually liable for debts or
liabilities of their corporations (art. 8, sec. 3).
There must be not fewer t h a n three nor more t h a n thirteen directors. They must hold not fewer t h a n four regular meetings a year, at which they make examinations
(1907, p. 362, 5). A majority of the directors m u s t be
residents of the county in which the bank is located or
adjacent counties. Each director of a b a n k capitalized
at less t h a n $50,000 must own one-twentieth of its paid-up
capital, and in a bank capitalized at more t h a n $50,000
must own not less t h a n $3,000 of paid-up capital (13).
Every officer and director violating any provision of the
s t a t u t e of 1909 is civilly liable for damages to any person




382

Nevada

—

S t a t e

Banks

injured (57). See also under X I , infra, t h e provision imposing personal liability upon directors who violate t h e
sections forbidding t h e m to borrow from their bank except
on security approved by the board, and limiting the
amount of loans to any individual and to stockholders of
the bank (33, 34, and 39).
III.—SUPERVISION.

The Nevada state banking board consists of the governor, who is ex officio chairman, and four other members,
appointed b y him. These appointees hold office for
terms of two years. The board meets twice a year and
a t such other times as the governor or any two members
request. Members of the board receive $10 a day while
performing their duties (5). The board has general
supervision and control of banks and banking under the
laws of t h e State (6). The governor appoints a suitable
person, who m u s t have had at least three years' experience in practical banking, to examine b a n k s ; this examiner, who is ex officio secretary of t h e board, m u s t not examine any bank in which he has a personal interest, or of
which he is, or within a year preceding his appointment
was, an officer or employee (7). His salary is $3,000 a
year (10); the appropriation for his salary in the 1909
statutes, however, was $5,500 (1909, chap. CXL, p . 162,
sec. 85).
The bank examiner, when ordered by the board, has
authority to t a k e possession of any banking corporation,
to retain possession long enough to make a thorough examination, and if he then finds t h a t the bank is insolvent
or is conducting its business in an unsafe or unauthorized
manner, or is endangering the interests of its depositors,
he has power t o hold possession of all its assets until the
board may receive his report and act upon it to have a




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Monetary

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receiver appointed ( n ) . The board may notify any
bank whose reserve falls below the requirement, or whose
capital is impaired, to replenish reserves or capital within
such time as the board directs; failure to comply is ground
for the appointment of a receiver (24). Whenever it
appears to the board, from an examination or a report,
that the capital of a banking corporation is impaired, or
that the corporation is conducting its business in an
unsafe or unauthorized manner, or is endangering the
interests of its depositors, and whenever a corporation
fails to make a report or to comply with any provision of
the 1909 statute, the board reports to the attorney-general,
who institutes suit for a receiver (44). The board proceeds for the appointment of a receiver of any corporation, firm, or individual doing a banking business except
by means of a properly organized corporation (2). Any
bank examiner when ordered by the board, or any receiver appointed under the 1909 statute, has authority to
hold the assets of a delinquent corporation until its liabilities have been fully discharged (50). After the board,
an examiner, or a receiver has taken possession of a bank,
its stockholders may repair its credit, replenish its reserves, and otherwise restore it to proper condition to
transact business, subject to the approval of the board
(46). Any bank may place its affairs voluntarily under
the control of the board by posting a notice on its door
(42). The provisions for proceedings in liquidating a
bank, proof of claims, distribution of assets, etc., are
somewhat detailed; see 47, et seq.
The state banking board passes upon reductions and
increases of capital, upon voluntary dissolutions (35 and
41), and upon consolidations (40), and makes rules and
regulations necessary to carry the 1909 statute into effect
(54). Whenever the bank examiner finds an officer of a
bank or trust company to be dishonest, reckless, or incom-




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—

S t a t e

Banks

petent, he requires the directors of the corporation to
remove him (56A).
REPORTS.

Every banking corporation reports to the state banking board not less than four times a year, according to the
form which the board prescribes (18), including the following items: Amount loaned on bonds and mortgages;
amount loaned on notes, bills of exchange, overdrafts,
and other personal securities, with market value of the
securities; amount of rediscounts and commercial paper
past due; real-estate investments, with cost; cash on
hand and on deposit, with names of depositories, etc.;
and other assets. Each report states resources and liabilities at the close of business on any past day specified
by the board, and must be presented to the board within
five days after receipt of its request. A summary is published in a local newspaper (19). Special reports may be
required at any time by the banking board or its chairman (20). After an examination the examiner reports
the condition of the examined institution to the board (9).
Reports of proposed reductions or increases of capital
must be made to the banking board (35). Receivers
report to the board monthly (53).
For reports required for taxation purposes, see 1907,
Chap. XCVII, sec. 5.
EXAMINATIONS.

The examiner investigates the affairs of every banking
corporation as often as the board thinks necessary, and
at least twice a year (7 and 9). He has authority,.when
ordered by the board, to take possession of a banking
corporation and retain possession for time to make a
thorough examination to determine the bank's solvency,
etc. (11). The board must cause an examination to be
S. Doc. 353, 61-2




25

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Monetary

Commission

made of any bank which proposes a voluntary liquidation
(41). When a bank has been in t h e possession of t h e
board, the examiner, or a receiver, and has p u t itself in a
position to resume business, the state banking board,
before allowing such resumption, must carefully investigate its affairs (46).
Directors at each quarterly meeting must thoroughly
examine the books and funds of their bank and record t h e
result on the bank's books (1907, p. 362, 5).
IV.—RESERVE

REQUIREMENTS.

Every banking corporation must have on hand in available funds an a m o u n t equal to 15 per cent of its entire
deposits; two-thirds m a y consist of balances due from
solvent banks, and one-third m u s t consist of cash. Reserve depositaries must maintain a 25 per cent reserve
(23). Cash includes lawful money of the United States
and exchange for any clearing-house association. When
the reserve falls below the requirement, the bank m u s t
not make new loans or discounts except by dealing in
sight exchange nor m a k e any dividends until the reserve
is replenished. The state banking board may notify a
bank delinquent in this respect to make good its reserve
within such time as the board directs (24).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

No banking corporation m a y loan to any single corporation, firm, or individual "including in such loan all loans
made to the several members of any such firm for the use
or benefit of such firm, corporation, or individual" more
t h a n 30 per cent of paid-up capital and surplus; b u t t h e
discount of bills of exchange drawn against existing
values, and of commercial paper owned by the persons
negotiating it, is not considered money borrowed. The




386

N e v a d a

—

S t a t e

Banks

total liabilities of stockholders to their bank must never
exceed 50 per cent of paid-in capital and surplus (34).
No banking corporation may loan or discount on the
security of shares of its own capital unless accepting this
security is necessary to prevent loss on a previous debt,
in which case the stock must be sold within six months
''from the time of its purchase." The a m o u n t of stock
" s o h e l d " (this includes stock held as security and owned
outright) must never exceed 10 per cent of the paid-up
capital of t h e bank (26).
No director, officer, or employee of a banking corporation m a y become indorser or surety for loans to others
or be in any manner obligated for money borrowed of his
bank (32). No director, officer, or employee m a y directly
or indirectly borrow money of the bank unless he gives
good security, the loan and security to be approved by
majority vote of directors, the applicant not voting (33).
No banking corporation may pay interest on time
deposits at a greater rate t h a n 4 per cent a year (27).
The aggregate of rediscounts and bills payable of any
banking corporation must never exceed paid-up capital
and surplus, nor may any corporation allow its loans and
investments, exclusive of reserve, banking house, and
fixtures, to exceed eight times its paid-up capital and
surplus (25).
VI.—INVESTMENTS.

A banking corporation may hold real estate only for the
following purposes: Such as is necessary for the convenient transaction of its business, not exceeding in value
one-third of paid-up capital; such as is conveyed to it for
debts due, and such as is purchased under judgment on
its securities, b u t at a judgment sale the bank must not
bid more t h a n is necessary to satisfy its debts, and real
estate purchased at judgment sale must not be held longer




387

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Monetary

Commission

t h a n five years and t h i r t y days; t h e total real estate held
m u s t never exceed in value 50 per cent of paid-up capital (29).
" N o bank or trust campany shall employ its moneys
directly or indirectly in trade or commerce by buying or
selling goods, chattels, wares, or merchandise, and shall
not invest any of its funds in the stock of any other b a n k
or trust company, nor be t h e purchaser or holder of any
shares therein, unless such securities or purchase shall be
necessary to prevent loss upon a debt previously contracted in good faith,' and stock so purchased or acquired
shall, within six months from t h e time of its purchase " be
disposed of; after six months, such stock may not be
considered assets. Any bank may, however, sell or acquire
any personal property which comes into its possession as
a collateral for a debt due it, according to t h e terms of
any contract depositing t h e collateral, or, if there is no
contract, then t h e collateral m a y be sold as on foreclosure
of a chattel mortgage (43).
No corporation m a y purchase shares of its own capital
stock unless the purchase is necessary to prevent loss on a
previous debt, in which case the stock must be sold within
six months from its purchase; in no case m a y the amount
of stock " s o h e l d " (both as collateral and b y purchase)
exceed 10 per cent of paid-up capital (26).
No bank m a y permit its loans and investments, exclusive of its reserve and banking house and fixtures, t o exceed
eight times its paid u p capital and surplus (25).
VII.—OVERDRAFTS.

The only mention of overdrafts in the statutes is where
it appears among the items required in reports of banking
corporations, " t h e amount loaned upon notes, bills of exchange, overdrafts," etc. (19).




388

N e v a d a

—

S t a t e

Banks

VIII.—BRANCHES.

No banking corporation doing business in Nevada may
maintain a branch (30).
X.—UNAUTHORIZED BANKING

I t is unlawful for any corporation, firm, or individual to
do a banking business in Nevada, except by means of a corporation organized for the purpose under the state statutes;
a violation of this section entails a penalty of $25 a day and
the appointment of a receiver to wind up the business (2).
Another section provides t h a t no person or persons m a y
transact a banking business except corporations which
have complied with the provisions of the statute of 1909,
except t h a t the act does not apply to national banks (6).
I t is unlawful for any person or corporation to do a banking business without first obtaining a license from t h e
banking board (12). Any corporation which transacts a
banking business without first obtaining a license is subject to a penalty of $50 a day (21); compare this penalty
with t h a t first given in this paragraph.
XI.—PENALTIES.

Any examiner who makes a false report of t h e condition
of an examined corporation with intent to aid in its operation while insolvent, or who takes a bribe to induce him
not t o file a report of an examination, or who neglects t o
make an examination on account of having taken a bribe,
is guilty of a felony punishable b y imprisonment for from
two to ten years (9).
Any corporation which fails t o make any report required
b y t h e 1909 s t a t u t e is subject to a penalty of $50 a day
during t h e delay (21). Any person who makes a false
statement or a false entry in the books of any banking
corporation, or subscribes t o false papers, etc., with in-




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Monetary

Commission

t e n t to deceive an examiner, or who makes a false statem e n t of the amount of assets or liabilities, is guilty of a
felony punishable b y imprisonment for from one to five
years (22).
Any officer, director, or employee of a bank which violates the prohibition upon paying more t h a n 4 per cent interest on time deposits is guilty of a misdemeanor punishable by fine of from $100 to $500, imprisonment not t o exceed six months, or both (27). Any director, officer, or employee of a banking corporation who becomes in any manner obligated for money loaned, by his bank forfeits his
office (32). Any director, officer, or employee of a b a n k
who borrows from his bank, directly or indirectly, without
giving security approved by the directors, or who violates
or allows a violation of t h e section limiting loans to individuals and to the stockholders of the bank, is personally
liable for loss suffered on account of his offense by the bank
(33, 34, and 39). Any officer, director, or employee who
violates or allows a violation of the second of the two sections above referred to, limiting the loans by a bank to any
single corporation, firm, or individual, and to the stockholders of the bank, suffers a fine not to exceed $500 (34).
I t is unlawful for any officer or employee of a bank to certify a check drawn upon the bank unless the drawer of the
check has on deposit an amount of credit equal to the face
of the check (38).
Where no other punishment is provided in the s t a t u t e at
page 251 of 1909, one who violates it is guilty of a misdemeanor punishable b y fine of from $25 to $500, imprisonment for from t h i r t y days to six months, or both (55).
Apart from t h e s t a t u t e in which the above penalties are
prescribed there are the following: Every officer, director, agent, etc., of a banking corporation who receives
deposits when he knows t h a t t h e b a n k is insolvent, and
every person who is implicated in receiving deposits in




390

Nevada

—

S a v i n g s

Banks

this way, is guilty of a felony punishable b y imprisonment for from one to ten years (1909, p . 95, 1); an older
s t a t u t e forbids in slightly different terms any president,
director, officer, etc., from assenting to the receipt of deposits or t h e creation of debts by an insolvent institution,
and provides t h a t any offender is individually responsible
for deposits received and debts contracted (1907, p . 362,
n ) . No officer of a banking corporation m a y advertise
t h e a m o u n t of capital stock authorized or subscribed
unless he also advertises the a m o u n t of capital actually
paid u p ; violation of this provision is a misdemeanor
punishable by a fine not to exceed $500, imprisonment
not to exceed six months, or b o t h (1907, p . 362, 14).
SAVINGS B A N K S .
See introductory paragraph; savings banks are subject
to all t h e provisions digested under Banks, except as
noted below.
I t is provided in the section limiting t h e loans and investments of banking corporations, exclusive of reserve,
banking house and fixtures, to eight times paid-up capital
and surplus, t h a t the loans and investments of a savings
bank, " exclusive of its reserve and banking house fixtures,''
must not exceed ten times capital and surplus (25). Savings banks are not subject t o t h e section limiting holdings
of real estate. See Banks, V I (29). The funds of a savings bank, excepting its reserve, must be invested in
United States bonds, or bonds of any State or of a municipality of any S t a t e ; or loaned upon negotiable paper
secured by such bonds or loaned upon notes or bonds
secured by mortgage on unincumbered real estate (second
mortgages m a y be taken on improved farm lands; no
loans m a y be made on these improved farm lands or other
real estate which loans, including the aggregate amount
of incumbrance on the land, exceed 50 per cent of the




39 *

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Monetary

Commission

cash value of the land) or loaned upon notes secured by
collateral of known marketable value; or held as cash;
or deposited in good solvent banks. Savings banks may
not loan upon chattel mortgages (36). A savings bank
may issue certificates for legitimate deposits (37).
TRUST COMPANIES.
See introductory paragraph; trust companies are subject to all the provisions given under Banks. They are
mentioned expressly once or twice in the statute of 1909:
"No bank or trust company" may engage in trade by
dealing in merchandise, invest its funds in the stock "of
any other bank or trust company,'' etc., see Banks, VI
(43); the bank examiner may order any officer "of any
bank or trust company" whom he finds to be dishonest,
reckless, or incompetent to be removed by the board of
directors (56A).




392

NEW HAMPSHIRE.
The Public Statutes, 1901, include all New Hampshire
legislation previous t o the session of 1901. Some of the
laws contained in t h a t revision, however, are not arranged
in chapters and sections, b u t are inserted simply naming
t h e year in which they were passed and t h e chapter in
t h a t year's laws. More recent legislation is in t h e session
laws of 1901, 1903, 1905, 1907, and 1909. The banking
statutes of 1909, although t h e session laws are not published in final form a t t h e time of compiling this digest,
have been obtained through t h e courtesy of t h e b a n k commissioners. The board of b a n k commissioners published
in 1905 a reprint of t h e statutes dealing with state banks,
sayings banks, and t r u s t companies, which forms, in part,
t h e basis of this digest. Certain provisions not included
in t h a t reprint have been incorporated, together with banking legislation of 1907 and 1909. A chapter on " B a n k s
of i s s u e " has been omitted from t h e digest. Where the
citations are prefixed b y t h e letters P. S., they refer t o laws
found in t h e Public Statutes, even though they m a y appear
there named b y chapter in some year's session laws.
Later statutes are cited b y t h e year, followed b y t h e
chapter, and, where necessary, t h e section in t h a t chapter.
BANKS.
I . — T E R M S OF INCORPORATION.

There is no express provision in t h e statutes allowing
banks to receive savings deposits; " b a n k i n g and trust




393

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Monet

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Commission

companies" may do so, for the s t a t u t e for savings bank
investments requires " savings banks and savings departments of banking and t r u s t c o m p a n i e s " t o invest only in
certain ways (1901, chap. 114, 1), and the penalty for
violating t h a t s t a t u t e applies to " a n y officer or trustee of
a savings bank or savings department of a banking and
trust c o m p a n y " (1901, chap. 114, 5).
(See also Public Statutes, chapter 165, section 18, which
requires " t r u s t companies, loan and trust companies, loan
and banking companies, and other similar corporations
receiving savings deposits " to conduct the savings business
separately.)
I I . — L I A B I L I T I E S AND D U T I E S O F STOCKHOLDERS AND
DIRECTORS.

The stockholders of a " b a n k i n g corporation" are liable
in their individual capacity for the debts of the corporation to the a m o u n t of their stock, and not otherwise
(p. a , 163,18).
The trustees or directors of savings banks, state banks,
and t r u s t companies meet at least monthly, at which meeting the work for the preceding m o n t h of the investment
and other committees is submitted to the board (P. S.,
1895, chap. 105, 2). If a trustee or director is absent for
five successive monthly meetings he forfeits his position
(P. S., 1895, chap. 105, 3). Directors of a state bank or
trust company must own ten shares of stock, unless t h e
stock of the institution does not exceed $50,000, in which
case five shares are sufficient (P. S., 1895, chap. 105, 8).
If banks are allowed to do a savings bank business, no
doubt the clause making a trustee or officer personally
liable for loss due to his illegal investment of savings
deposits applies (1901, chap. 114, 5). The semiannual
report (see infra) is based on an examination by the




394

New

Hampshire

— State

Banks

directors (P. S-, chap. 165, 20, and P. S, 1895, chap.
105, 5)III.—SUPERVISION .

Banks, savings banks, and trust companies are under the
supervision of a board of bank commissioners, consisting
of three residents of New Hampshire, who m u s t not be
indebted to any savings bank or trust company in New
Hampshire, or officers in a savings bank or t r u s t company ; they m u s t not be agents of persons or corporations
engaged in making loans or selling securities, nor be
officers or stockholders in a corporation engaged in t h a t
business. Not more t h a n two members m a y be appointed
from one political p a r t y (P. S., chap. 162, 2). The t e r m of
office is three years, a new commissioner being appointed
each year (P. S., chap. 162, 3, amd. by 1905, chap. 26, 1).
The salary is $2,500 a year (P. S., chap. 162, 4; amd. by
1905, chap. 26, 2).
If a bank, savings bank, or trust company refuses to allow
an examination, or does not furnish necessary facilities for
the examination, or if the commissioners think it necessary
for public safety t h a t t h e institution should not continue
to transact business, they petition t h e court, which m a y
enjoin further business. F u r t h e r proceedings m a y lead
to the appointment of a receiver. The conduct of t h e
liquidation b y t h e receiver is provided for in some detail
(P. S., chap. 162, 12 et seq.; amd. in part by 1905, chap.
55, 1).
Provision is made for supervision by the commissioner
of examination, verification, etc., of pass books of depositors
in " e v e r y institution under their supervision," b u t the
other sections of t h e act in which this is provided for seem
t o indicate t h a t this requirement is made only of savings
banks (P. S., 1899, chap. 72, 2).




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REPORTS.

The provision for semiannual reports from savings banks
is extended to require the same reports from state banks
and t r u s t companies (P. S., 1895, chap. 105, 5). The clerk
of every state bank, savings bank, and trust company m u s t
publish within t h i r t y days of an election a list of t h e trustees or directors (P. S., 1895, chap. 105, 4). The treasurers
of all institutions under the supervision of the b a n k commissioners balance their books on t h e last business day in
J u n e of each year and within fifteen days from t h a t time
report to the commissioners on blanks furnished by them,
showing the condition of the institutions. The commissioners prescribe w h a t information is required (P. S.,
chap. 162, 8). Receivers of insolvent institutions m a k e
reports as t h e treasurers of t h e institutions themselves are
required to do (P. S., chap. 162, 18).
The cashier of every state b a n k makes a statement of
the condition of his bank on t h e first Monday of March,
June, September, and December, specifying stock paid in;
debts due secured by a pledge of the bank's stock (but see
the prohibition on loans on such collateral, stated under
V, infra)\ value of real estate; debts due the b a n k ;
debts due from directors; specie on hand; and deposits
in the bank (P. S., chap. 164, 1). Abstracts of these
quarterly returns m u s t be published by the secretary of
state (P. S., chap. 164, 4).
(For reports required for purposes of taxation see Public
Statutes, chapter 57, section 19 et seq.y and Public S t a t u t e s
1895, chapter 113, section 4.)
The board of b a n k commissioners files with the secret a r y of state an annual report containing a statement of t h e
resources and liabilities of every institution under their
supervision; its earnings between examinations, or for a
twelve month's period; disbursements for the same pe-




396

New

Hampshire

— State

Banks

riod for expenses, etc.; dividends paid; names of certain officers of each institution, with salaries; kinds and
amounts of stocks and bonds held by each institution with
values; and a statement of the true condition of each
institution. The commissioners make recommendations
in this report (P. S., chap. 162, 9).
EXAMINATIONS.

The board of bank commissioners examines into the
condition a n d management of banks, savings banks, and
trust companies a t least annually, and oftener if directed
by the governor. They inspect books, evidences of debt,
funds on hand, etc., and inquire into the ability of each
institution to perform its engagements, and into its compliance with law (P. S., chap. 162, 6). They m a k e the
same examinations into t h e affairs of receivers of insolvent
institutions as into the affairs of solvent institutions
(P. S., chap. 162,18). Every state bank, savings bank, and
trust company keeps a particular book or record of loans
and investments, which is exhibited to the trustees and t h e
commissioners at each examination (P. S., 1895, chap.
105, 6). The directors m a k e a semiannual examination
on which their report is based (P. S., 1895, chap. 105, 5).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

" N o savings bank, state bank, or trust company shall
loan to any person, firm, or its individual members, an
amount in excess of 10 per cent of its deposits or capital
stock, nor purchase or hold b o t h b y way of investment
and security for loans, the stock, and bonds of any corporation to an amount in excess of said 10 per c e n t "
(P. S., 1895, chap. 105, 12). The capital stock of a state
bank or t r u s t company may not be accepted b y t h e b a n k
or trust company as collateral (P. S., 1895, chap. 105, 9).




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Monetary

Commission

No loan m a y be made t o an officer or director of a state
b a n k or trust company except b y t h e unanimous consent
of t h e board of directors (P. S., 1895, chap. 105, 10).
The cashier of a state b a n k m a y not be directly or indirectly indebted to it (P. S., chap. 163, 12). No director
of a state bank m a y be indebted t o it directly or indirectly
to an a m o u n t greater t h a n one-half t h e stock in t h e b a n k
then held by him. Loans of state banks to any director
must never exceed 3 per cent of t h e cash capital of t h e
b a n k (P. S., chap. 163, 13). Contracts b y a director or
other officer of a state b a n k " t o indemnify any other
person for liability t o t h e b a n k or subjecting himself t o
liability t o t h e b a n k on account of any other p e r s o n " are
void (P. S., chap. 163, 14).
VI.—INVESTMENTS.

Every state bank, savings bank, and t r u s t company has
an investment committee of not less t h a n three of its
directors or trustees (P. S., 1895, chap. 105, 1). No state
bank, savings bank, or trust company may hold as investm e n t t h e stock and bonds of any corporation to an amount
in excess of 10 per cent of t h e capital stock or deposits (the
latter in t h e case of savings banks presumably) of t h e
investing corporation (P. S., 1895, chap. 105, 12).
X.—UNAUTHORIZED BANKING.

Limited partnerships m a y not be formed t o do a banking
business (P. S., p . 381).
XI.—PENALTIES.

If any b a n k commissioner in t h e annual report makes a
statement without having fully examined t h e condition
of t h e institution with regard to which his statement is
made, or makes a false statement, he is fined not more




398

New

Hampshire

— Savings

Banks

t h a n $1,000, or imprisoned for not longer t h a n five years
(P. S., chap. 162, 10). If the clerk of a state bank, savings bank, or trust company fails to publish t h e list of
annually elected directors or trustees or makes a false
publication, he is liable to a penalty of $100; so is any
person who circulates a list of directors or trustees containing names of persons who have not entered the office and
taken t h e oath (P. S., 1895, chap. 105, 4). Any director
or trustee of a state bank, savings bank, or trust company
who makes a statement of t h e condition of the institution without having fully examined it, or makes a false
statement, is fined not more t h a n $1,000, or imprisoned
for not longer t h a n five years (P. S., 1895, chap. 105, 5).
The director of a b a n k who exceeds t h e limit of loans from
the b a n k to him is fined double t h e excess, one-half of the
fine going to t h e person who sues (P. S., chap. 163, 13).
Any officer or director of a state b a n k or trust company
violating any provision of law for which no other penalty
is prescribed is punished b y a fine not exceeding $500
(P. S., 1895, chap. 105, 13). Any officer of a state b a n k
who receives compensation for procuring a loan, indemnifying an indorser on paper held by t h e bank, etc., forfeits $100 and three times the amount of t h e compensation t o any person who sues (P. S., chap. 163, 15). Any
state b a n k which fails t o make a quarterly cashier's report
is fined n o t more t h a n $1,000 for each offense (P. S., chap.
164, 3).
SAVINGS B A N K S .
I . — T E R M S OF INCORPORATION.

There are in New Hampshire g u a r a n t y savings banks
with capital stock and m u t u a l savings banks without.
No guaranty savings bank, trust company, or other
similar corporation m a y begin business until it has satis-




399

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Mon

etary

Commission

fied t h e commissioner t h a t its capital has been paid in
(P. S., chap. 162, 11).
The total yearly expenses of a savings bank must not
exceed $4,000 while the average amount of its deposits is
$1,000,000 or less, and in no given case may exceed t h e
sum produced b y adding to $4,000 one-fifth of 1 per cent
of t h e excess of deposits over $1,000,000 (P. S., chap.
165, 5)Every savings b a n k annually passes to t h e credit of its
guaranty fund a sum equal to 10 per cent of its net earnings for the year until t h e fund equals 5 per cent of
deposits. This guaranty fund m a y be increased to 10
per cent of deposits (P. S., chap. 165, 16). The special
depositors of a guaranty fund in a savings b a n k doing
business under t h e guaranty system may increase t h e
fund at a meeting of depositors. This increase m a y be
subscribed for by the special depositors in proportion to
their special deposits, or b y other parties in case the special
depositors fail to subscribe for it all. The increase in
t h e guaranty fund m a y be on such terms of preference
over t h e original funds as to dividends and in distribution
of aSvSets as may be determined by vote of t h e special
depositors (P. S., 1895, chap. 92, 1).
No savings b a n k m a y pay more t h a n 3 ^ per cent dividends unless it has accumulated a guaranty fund equal to
5 per cent of its deposits, nor unless its assets as valued
by the bank commissioners exceed t h e amount due depositors by at least 5 per cent; no savings b a n k having a
guaranty fund less t h a n 5 per cent of deposits, nor any
savings bank whose assets do not exceed deposits b y at
least 5 per cent m a y declare in any year dividends exceeding net income after providing for a guaranty fund. (Act
of April 8, 1909.)




400

New Hampshire
II.—LIABILITIES

AND

— Savings
DUTIES

OF

Banks

STOCKHOLDERS

AND

DIRECTORS.

For stockholders' liability in " b a n k i n g corporations,''
see Banks, I I .
The provisions stated under Banks for monthly
meetings of trustees and for loss of office when absent
from five successive monthly meetings apply to t h e
trustees of savings banks (P. S., 1895, chap. 105, 2 and 3).
The requirement for holding stock as a prerequisite to
eligibility to be a trustee is so framed t h a t apparently t o
be a trustee of a guaranty b a n k one must own ten shares of
the guaranty fund of t h e institution, unless t h e guaranty
fund does not exceed $50,000, in which case five shares
qualify (P. S., 1895, chap. 105, 8). No person indebted
to a savings b a n k is eligible to any office in t h e bank
unless the loan was made with the consent of all the
trustees (P. S., chap. 165, 2 and 13). No one engaged
in negotiating loans or selling securities in New H a m p shire is eligible to be president, treasurer, or a member of
the investment committee of a savings bank (P. S., chap.
165, 3). Trustees may be paid a reasonable compensation for their services (P. S., chap. 165, 4). Officers and
employees of savings banks, trust companies, etc., are
forbidden to receive compensation for procuring a loan
from t h e b a n k (P. S., chap. 165, 30). If any officer or
trustee of a savings bank violates t h e provisions limiting
savings-bank investments, he becomes, in addition to t h e
regular penalties, personally liable for losses which m a y
occur to t h e b a n k from his investment (1901, chap. 114, 5).
III.—SUPERVISION.

Savings banks are placed under the supervision of t h e
board of bank commissioners (P. S., chap. 162, 1). The
S. Doc. 353, 61-2




26

401

National

Monetary

Commission

qualification and tenure of this board were stated under
Banks. G u a r a n t y savings banks may not begin business until they have satisfied t h e commissioners t h a t their
capital is paid in (P. S., chap. 162, 11). The provisions
for proceedings in court against savings banks which
refuse to be examined or which public safety requires to
be closed are as stated under Banks (P. S., chap. 162,
12 et seq).
A judge, in connection with t h e bank commissioners, on
petition of t h e trustees of a savings bank, m a y scale down
t h e deposit accounts, if the assets of the b a n k become worth
less t h a n the total amount of deposits, so as to divide t h e
loss equitably among depositors. This m a y be done b y t h e
commissioners themselves when the assets are reduced below
90 per cent of the deposits. If the assets appreciate in
value later, the depositors whose accounts were reduced
receive the excess. If new deposits are received after this
sort of reduction, the business relating to the new deposits
is conducted as though by a separate bank (P. S., chap. 165,
26,27,28, and 29). TJhe commissioners may cause the separation of a savings bank and a national bank occupying t h e
same office (IX, infra; P. S., chap. 165, 22). They have
supervision over a verification of deposit books of savings
banks and a corresponding trial balance required every four
years. They require " every institution under their supervision " to select a competent person to examine and verify
the individual pass books. Depositors are required t o
present their books (P. S., 1899, chap. 72, 1, 2, and 4).
REPORTS.

The trustees of every savings bank make an examination of the affairs of the b a n k every six months, on which
they base a report in the form prescribed b y the b a n k
commissioners. They publish this report in a local news-




402

New H amps hire — Savings

Banks

paper (P. S., chap. 165, 20). The treasurers of all institutions under the supervision of t h e bank commissioners
balance their books on the last day of J u n e in each year,
and within fifteen days report to the commissioners on
blanks furnished by t h e m showing the condition of the
institutions (P. S., chap. 162, 8). Receivers report as
solvent institutions do (P. S., chap. 162, 18). As in the
case of banks, the clerk of every savings b a n k is required
to publish lists of newly elected trustees (P. S., 1895, chap.
105, 4-)Every five years the treasurer of every savings bank
makes a list of depositors who have not deposited or withdrawn funds for twenty years, if they are not known to
the treasurer t o be living, or if, though they are dead, their
executors or administrators are not known to t h e treasurer. This list, showing addresses, fact of death, if known,
a n d a m o u n t t o t h e credit of t h e lost depositors, if it exceeds $5, is published in local newspapers and transmitted
to the b a n k commissioners to be published in their report
(P. S., chap. 165, 24).
(For reports for purposes of taxation see Public Statutes,
1895, chapter 113, section 4, and Public Statutes, chapter
165, section 12.)
The board of commissioners, as stated under Banks,
make an annual report. The special item required in it
from savings banks is the statement of unclaimed deposits
(P. S., chap. 162, 9, and P. S., chap. 165, 24).
EXAMINATIONS.

The trustees of every savings bank, in person or by a
committee of the board, make a thorough examination
of the affairs of the savings bank every six months, on
which their report to the commissioners is based (P. S.,
chap. 165, 20). Once a year, or oftener if t h e governor




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M o n e t ar y

Commission

requires, the board examines the condition and managem e n t of every savings bank, as in the case of banks (P. S.,
chap. 162, 6). Receivers are examined as t h e solvent
institutions are (P. S., chap. 162, 18). The record book
of loans and investments is kept for investigation b y t h e
trustees and the b a n k commissioners as in state banks
(P. S., 1895, chap. 105, 6).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

The guaranty fund of a guaranty savings b a n k m a y not
be accepted b y t h e savings b a n k as collateral (P. S.,
1895, chap. 105, 9). " N o savings bank, state bank, or
t r u s t company shall loan to any person, firm, or its individual members an amount in excess of 10 per cent of its
deposits or capital stock, nor purchase or hold b o t h b y
way of investment and security for loans, the stocks and
bonds of any corporation to an amount in excess of said
10 p e r c e n t " (P. S., 1895, chap. 105, 12). It seems as
though in this provision the percentage of deposit was
intended to apply to savings banks and the percentage of
capital stock to state banks and t r u s t companies.
No savings bank may loan to one of its officers nor
accept an officer as surety unless all the trustees have
consented (P. S., chap. 165, 13). No officer or employee
of a savings b a n k m a y accept a compensation from a borrower to induce a loan (P. S., chap. 165, 30).
(For incidental loan restrictions classified with investments in the statutes see VI, infra.)
VI.—INVESTMENTS.

Savings banks, like state banks, elect from their trustees
an investment committee of not less t h a n three (P. S.,
1895, chap. 105, 1). No savings b a n k m a y hold as investment and as collateral stock and bonds of any cor-




404

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— Savings

Banks

poration to an amount in excess of 10 per cent of t h e deposits of t h e savings bank, or of its capital stock (P. S., 1895,
chap. 105, 12).
The prescribed investments for savings banks are as
follows: First, notes secured by first mortgages of
New Hampshire real estate, b u t not over 70 per cent
of the value of the property covered m a y be thus
loaned, and not over 70 per cent of the deposits may
be thus invested. Second, notes secured by a first
mortgage of real estate outside New Hampshire, if improved, occupied, and productive, b u t not over 50 per
cent of t h e value of t h e property m a y be thus loaned, and
not more t h a n 25 per cent of deposits m a y be thus invested. Third, in notes secured b y collateral in which the
b a n k is at liberty to invest, of a value at least 10 per cent
in excess of t h e face of t h e note. The amount of any one
class of securities thus taken as collateral, added to the
a m o u n t of securities of t h a t class which the b a n k holds,
must not exceed the total limit set for investments in t h a t
class; not more t h a n 25 per cent of deposits m a y be invested in this manner. Fourth, in notes secured b y collateral securities which are dealt with on the Boston or
New York exchange, provided t h e stock-exchange price
is 20 per cent in excess of the face of the note; not more
t h a n 25 per cent of deposits m a y be thus invested. Fifth,
in notes of individuals or corporations with two or more
signers or one or more indorsers, b u t not exceeding 5 per
cent of deposits m a y be loaned to one person or corporation
in this class of security, and not exceeding 25 per cent of
deposits m a y be thus invested. Sixth, in public funds of
the United States. Seventh, in bonds and notes of New
Hampshire or municipalities of New Hampshire. Eighth,
in bonds or notes of any State or Territory of t h e United
States, and bonds or notes of any city in the other New
England States or in New York, whose net indebtedness




405

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Monetary

Commission

does n o t exceed 5 per cent of t h e value of property in t h e
city for taxation, or bonds or notes of counties, towns, etc.,
in those States whose indebtedness does not exceed 3 per
cent. Ninth, in bonds of municipalities of other States or
Territories of t h e United States whose net indebtedness
does not exceed 5 per cent of t h e value of their property for
t a x a t i o n ; also bonds of any city of 100,000 in any of those
States whose net indebtedness does not exceed 7 per
cent of the value for taxation. Bonds are not legal investments if t h e y have been issued in aid of railroads or
for special assessment purposes. Moreover, bonds of
counties, cities, and towns of less t h a n 10,000, or of other
municipal corporations of less t h a n 2,000, are not legal
investments. To be legal investments these bonds m u s t
be issued b y municipalities t h a t are permitted t o levy
taxes sufficient to pay t h e interest and to provide for sinking funds for their debt. Not exceeding 50 per cent of
deposits m a y be thus invested. Tenth, in bonds or notes
of railroad companies, except street railways, incorporated
under New Hampshire law, and located wholly or in p a r t
in New Hampshire, b u t not exceeding 25 per cent of deposits m a y be t h u s invested. Eleventh, in bonds of any
railroad company, except street railways, incorporated
under t h e law of " any of the New England States, whose
road is located wholly or in p a r t in the s a m e , " and which
is operating its own road and has paid regular dividends for
two years; also bonds guaranteed b y such a railroad company. B u t not exceeding 25 per cent of deposits m a y be
thus invested. Twelfth, in bonds of any railroad company, except street railways, incorporated under t h e law
of any State or Territory, if it is operating its own road
and has paid regular dividends of not less t h a n 4 per cent
for three years, provided t h a t t h e capital equals one-third
of t h e entire bonded debt; also bonds guaranteed b y such
a railroad. B u t not exceeding 25 per cent of deposits




406

New

H amps hire — Savings

Banks

may be thus invested. Thirteenth, in first-mortgage bonds
of corporations of New Hampshire, except street railways,
whose net indebtedness does not exceed the paid-in capital
stock; but not exceeding 10 per cent of deposits may be
thus invested. Fourteenth, in bonds of street-railway
corporations incorporated under New Hampshire law and
located wholly or in part there, and bonds of street-railway corporations located wholly or in part in cities of
30,000 inhabitants or more in any of the other New England States, and bonds of street-railway corporations
located wholly or in part in cities of 50,000 or more in any
of the United States, provided that the net indebtedness of
any of these street railways does not exceed the paid-in
capital, and that the corporation has paid dividends of
not less than 4 per cent for five years. But not exceeding
10 per cent of deposits may be thus invested. Fifteenth,
in bonds of telephone, telegraph, or express companies
doing business in the United States, provided the total
indebtedness of the company does not exceed its paid-in
capital, and provided that the company has paid regular
dividends of at least 4 per cent for five years. But not
exceeding 10 per cent of deposits may be thus invested.
Sixteenth, in the stock of any banking or trust company
of New Hampshire, but the amount of such stock held
by any savings batik as an investment and as collateral
must not exceed one-tenth of the total capital of the company whose stock is held, and not exceeding 10 per cent
of the deposits may be thus invested. Seventeenth, in
stock of any national bank or trust company in the New
England States or in New York, but the amount of such
stock held by any savings bank as an investment and
as collateral must not exceed one-tenth of the total
capital of the bank or trust company whose stock is held
(except in the case of a New Hampshire national bank
or trust company, of which a savings bank may hold not




407

National

Monetary

Commission

exceeding 25 per cent of t h e total capital—amendment of
March 31, 1909), and not exceeding 10 per cent of deposits
m a y be thus invested. Eighteenth, in stock or notes
of any railroad corporation, exclusive of street railways,
located in t h e United States, t h a t has paid dividends
of not less t h a n 4 per cent for five years, provided t h e
capital equals one-third of the bonded debt. Also stock
of any other railroad whose property is leased to such
a railroad at an annual rental of n o t less t h a n 4 per cent
of t h e capital of t h e leased railroad, provided t h e leased
road has earned dividends of not less t h a n 3 per cent
for three years before t h e lease. B u t not exceeding 25
per cent of deposits m a y be t h u s invested. Nineteenth,
in stock or notes of any manufacturing company in New
England t h a t has paid dividends for five years and does
not show a debt exceeding t h e amount of its paid-in
capital; b u t n o t exceeding 10 per cent of deposits m a y
be thus invested. Twentieth, in stocks or notes of any
parlor-car or sleeping-car company in t h e United States
whose cars are in use on a railroad whose stock is a legal
investment, provided t h e company has paid regular dividends of not less t h a n 4 per cent for five years; b u t n o t
exceeding 5 per cent of deposits m a y be t h u s invested.
Twenty-first, in land and buildings for banking purposes,
t h e total cost of which m u s t not exceed 10 per cent of
deposits (1901, chap. 114, 1, amd. b y 1905, chap. 8 1 , a n d
1907, chaps. 29 and 67). Twenty-second, in t h e stock
of any real-estate trust company of New Hampshire
whose property is located in t h e State, and whose capital
is $100,000 or more, provided its debts do not exceed
one-half its paid-in capital, and provided it has earned
and paid 4 per cent dividends for five years; b u t not
exceeding 5 per cent of deposits may be t h u s invested
(act of March 11, 1909). Savings banks m a y hold and
lease real estate acquired b y foreclosure of mortgages




408

New Hampshire

— Savings

Banks

owned by t h e bank, b u t they must pay taxes, etc., out
of t h e bank's income (1901, chap. 114, 2). Deposits of
cash on call m a y be made in authorized banks and trust
companies in New Hampshire or Massachusetts, or in
national banks in New England, New York City, or Philadelphia (1901, chap. 114, 3).
IX.—OCCUPATION OF T H E SAME BUILDING.

If a savings b a n k does business in t h e same office with
a national bank, t h e treasurer of t h e savings bank must
cause a committee of t h e directors of t h e national bank to
indorse on t h e reports of the examinations of t h e savings
bank which are m a d e to the b a n k commissioners a certificate t h a t they examined the affairs of the national bank
at t h e same time and found t h e m correct (P. S., chap.
165, 21). If t h e treasurer fails to furnish this certificate
within a time fixed by t h e commissioners, they m a y separate t h e two banks (P. S., chap. 165, 22).
X.—UNAUTHORIZED BANKING.

No person, firm, or corporation except savings banks
incorporated in New Hampshire, and trust companies,
loan companies, etc., empowered by their charters, may
use a sign, or printed paper, indicating t h a t t h e business
is t h a t of a savings bank, or transact business in a way
suggestive of t h a t of a savings bank. The commissioners
m a y examine the books of any corporation, firm, or individual receiving money on deposit to make sure it has not
violated this provision. The penalty for violation is
$100 a day (1907, chap. 112, 2 and 3).
XI.—PENALTIES.

The penalties stated under Banks hold good for false
reports b y a bank commissioner (P. S., chap. 162, 10),




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M o n et ar y

Commission

failure on t h e p a r t of t h e clerk of t h e corporation t o p u b lish t h e list of newly elected trustees (P. S., 1895, chap.
105, 4), and false statement or report b y trustees or
directors (P. S., 1895, chap. 105, 5). Any officer or
trustee of a savings bank willfully violating any provisions where no other penalty is prescribed forfeits, as
in t h e case of b a n k officers and directors, not more t h a n
$500 (P. S., 1895, 105, 13). There is a provision also in
chapter 165 t h a t t h e violation of any provision of law
b y a savings b a n k or its officer, where no other penalty is
prescribed, is a fine not to exceed $1,000 (P. S., chap. 165,
33). If the treasurer of a savings bank allows private
banking to be carried on in t h e office of the savings b a n k
he is fined not more t h a n $1,000, imprisoned not longer
t h a n one year, or suffers b o t h penalties (P. S., chap. 165,
10 and 11). If t h e treasurer of a savings bank neglects to
publish his report of unclaimed deposits he is fined $100
for each offense (P. S., chap. 165, 25). Any officer or
employee of a savings bank, t r u s t company, etc., who
receives a fee as an inducement for a loan by t h e b a n k is
fined not more t h a n $10,000, imprisoned not more t h a n
ten years, or suffers both penalties (P. S., chap. 165, 31).
Any officer of a savings bank, loan and trust company,
etc., who embezzles, or makes false entries or statements,
intending to defraud, or to deceive an officer or some
examining official, is fined not more t h a n $20,000, or
imprisoned not longer t h a n ten years (P. S., chap. 165, 32).
The person appointed to verify depositors' books in
savings banks suffers, if he makes a false statement of the
result of his examination, a fine of not more t h a n $500, or
imprisonment for not more t h a n one year (P. S., 1899,
chap. 72, 1).




410

New

Hampshire

—

Trust

Companies

TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

The statutes allow trust companies to do a savings
deposit business (P. S., 1901, chap. 114, 1 and 5). Moreover, trust companies, loan and trust companies, etc.,
receiving deposits or transacting the business of a savings
bank must conduct the business as a separate department,
and that department is amenable to the laws governing
savings banks (P. S., chap. 165, 18).
Trust companies are not allowed to begin business until
all their capital stock has been paid in (P. S., chap.
162, 11).
II.—LIABILITIES

AND D U T I E S

O F STOCKHOLDERS AND

DIRECTORS.

If trust companies are within t h e term " b a n k i n g corp o r a t i o n s " their stockholders are liable in their individual
capacity only for t h e debts of t h e corporation to t h e
a m o u n t of their stock (P. S., chap. 165, 18).
The requirement stated under Banks t h a t directors
meet a t least monthly to review t h e work of t h e investm e n t committee and other committees for t h e preceding
month, and t h e provision t h a t directors absent from five
successive monthly meetings forfeit their positions hold
good in t r u s t companies (P. S., 1895, chap. 105, 2 a n d 3).
Every director of a trust company, as in t h e case of banks,
must own a t least ten shares of stock, unless t h e capital
does n o t exceed $50,000, in which case five shares are
sufficient (P. S., 1895, chap. 105, 8). No officer or employee of a t r u s t company m a y accept a compensation
for inducing t h e making of a loan b y t h e t r u s t company
(P. S., 165, 30). Officers or trustees of t h e savings departm e n t are personally liable for loss which a b a n k suffers




411

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Monetary

Commission

through their willful violation of t h e requirements for
savings-deposit investments (P. S., 1901, chap. 114, 5).
E a c h semiannual report is based on an examination
which must be m a d e b y the directors (P. S., chap. 165,
20, and P. S., 1895, chap. 105, 5).
III.—SUPERVISION.

The board of bank commissioners have control over
t r u s t companies (P. S., chap. 162, 1). The provisions for
winding up t h e affairs of trust companies which refuse t o
be examined or which seem to t h e commissioners t o be in
dangerous condition are as stated under Banks (P. S., chap.
162, 12 et seq.).

R E P O R T S and

EXAMINATIONS are

subject

to t h e same rules as were given under Banks.
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

See Banks for provisions applicable also to t r u s t
companies forbidding stock in a trust company to be
taken by t h e company as collateral, forbidding loans to
officers or directors except by unanimous approval of
t h e board of directors, and forbidding loans t o individuals, firms, etc., in excess of 10 per cent of capital stock
of t h e t r u s t company, and the acceptance as collateral
of such stock and bonds of any corporation as to m a k e
the lender hold an amount in excess of 10 per cent of t h e
lender's, capital (P. S., 1895, chap. 105, 9, 10, and 12).
See also the prohibition upon the acceptance of compensation by an officer or employee of a trust company for
inducing the company to make a loan (P. S., chap. 165, 30).
VI.—INVESTMENTS .

Every trust company has an investment committee such
as banks have (P. S., 1895, chap. 105, 1). As under
Banks, there is also a prohibition on holding stock and




412

New

Hampshire

—

Trust

Companies

bonds of any corporation to an amount greater t h a n
10 per cent of the capital of the investing t r u s t company
(P. S., 1895, chap. 105, 12).
XI.—PENALTIES.

See Banks (XI) for penalties upon bank commissioners who report falsely, upon clerks who fail to publish
lists of newly elected directors, and upon directors who
report falsely. See Banks also for the penalty for
violating a law in which no particular penalty is prescribed. The officer or employee of a trust company who
takes a compensation for inducing a loan, etc., suffers
a fine of not exceeding $10,000, imprisonment for not
more t h a n ten years, or both (P. S., chap. 165, 30 and 31).
There is a penalty upon any officer of " a loan and trust
c o m p a n y " who embezzles, or commits various frauds,
including false entries or statements, of not more t h a n
$20,000 or imprisonment not exceeding ten years (P. S.,
chap. 165, 32).




413

NEW JERSEY.
The statutes of this State are in so inconvenient a form
for investigation, there having been no revision since 1895,
t h a t t h e pamphlets issued in 1906 by t h e department of
banking and insurance—one containing the laws relating
to banks, banking, and trust companies, the other containing the savings bank act—have been relied on for t h e
digest, merely bringing it to date b y references to chapters in t h e laws of New Jersey for 1907, 1908, and 1909.
E a c h reference in the digest gives the year of the s t a t u t e
in question, t h e chapter in t h a t year's laws, and t h e
section in the chapter.
BANKS.
I . — T E R M S OF INCORPORATION.

The capital stock of every bank must be not less t h a n
$50,000, and divided into shares of $100 each, all of which
m u s t be paid in in cash before business is begun. No corporation organized under the banking law m a y issue more
t h a n one class of stock (1899, chap. 173, 1). Before
allowed to begin business t h e incorporators m u s t show t h e
commissioner of banking and insurance t h a t t h e establishment of t h e proposed bank will be of public service (1899,
chap. i73>3;Dividends m a y be declared out of net profits, b u t before
t h e declaration not less t h a n one-tenth of the net profits
for the preceding dividend period must be carried to surplus until t h e fund amounts to 20 per cent of the capital
(1899, chap. 173, 10).




414

New

Jersey

—

State

Banks

I I . — L I A B I L I T I E S AND D U T I E S O F STOCKHOLDERS AND
DIRECTORS.

There is no special provision for liability of stockholders
in banks.
There m u s t be not fewer t h a n five directors, a majority
of whom must be residents of New Jersey. Every director
must hold not less t h a n five shares of stock (1899, chap.
!73> 9> a m d . by 1906, chap. 190). The board appoints
an examining committee to m a k e an examination as
stated below (1899, chap. 173, 11). If the directors fail to
exact of the cashier a $20,000 bond, they are personally
liable for his defalcations up to t h a t a m o u n t (1899, chap.
173, 22).
III.—SUPERVISION.

There is a d e p a r t m e n t of banking and insurance (1891,
chap. 6, 1), of which the chief officer is the commissioner
of banking and insurance, appointed for terms of three
years. The commissioner must not be connected with the
management of any corporation over which he exercises
supervision (1891, chap. 6, 2). His salary is $6,000 a year
(1903, chap. 34).
The commissioner, before authorizing the incorporation
of a bank, m u s t determine t h a t t h e establishment of t h e
b a n k will be of public service (1899, chap. 193, 3). Whenever it appears to him from a report or examination t h a t
the affairs of any b a n k are in an unsound condition on account of illegal and unsafe investments, or t h a t its liabilities exceed its assets, or t h a t it is violating law, or t h a t
it is inexpedient t h a t the b a n k continue business, then he
m u s t cause proceedings to be instituted against the b a n k
as against an insolvent bank, or such other proceedings as
t h e case m a y require. If he has reason to conclude t h a t
t h e b a n k is in an unsound or unsafe condition, he m a y
take possession of its assets and retain possession until the




415

National

Monetary

Commission

proceedings t h a t he has caused to be instituted b y t h e
attorney-general are concluded, or until a receiver is appointed (1899, chap. 173, 24). If any bank refuses to
submit its affairs to examination, t h a t is ground for proceedings as against an insolvent bank. If it appears to
t h e commissioner t h a t any b a n k has violated the law, or
is conducting its business unsafely, he orders a discontinuance of t h e practices; if t h e b a n k does not comply
with the order, this is ground for the same proceedings
(1899, chap. 173,25). Whenever a bank is insolvent or
suspends its business for w a n t of funds, the attorneygeneral or any creditor or stockholder m a y petition t h e
court for t h e appointment of a receiver. If t h e court
thinks the corporation insolvent and not about to resume
business in a short time safely, it m a y issue injunctions,
etc.; or if it is m a d e to appear to the court on application
of t h e attorney-general t h a t t h e b a n k is in an unsound
condition; t h a t liabilities exceed assets; t h a t there has been
violation of law; t h a t examination has not been allowed;
or t h a t it is inexpedient for the b a n k to continue business,
the court may stop the bank's business and appoint a receiver (1899, chap. 173, 29 and 30, amd. by 1906, chap.
156).
Creditors or shareholders of a b a n k interested t o t h e
a m o u n t of $1,000 or more m a y apply to t h e court of chancery, which m a y order a strict examination by persons
appointed by it and make such orders as it thinks necessary (1899, chap. 173, 26). On an application b y two or
more directors, creditors, or stockholders of a n y b a n k the
court of chancery must appoint one or more commissioners
to examine t h e b a n k ; if t h e b a n k refuses to allow examination b y this commissioner of court, or if after examination t h e court thinks public interest demands it, t h e court
directs t h e attorney-general to proceed as against a n insolvent b a n k (1899, chap. 173, 27).




416

New

Jersey

— State

Banks

REPORTS.

Every bank makes to the commissioner not less than
four reports annually according to the form he prescribes;
the report shows the condition of the bank at the close of
business on a past day specified by the commissioner, and
is transmitted to him within ten days after receipt of his
request. A summary is published in a local newspaper.
The commissioner may call for special reports when necessary (1899, chap. 173, 13).
The commissioner makes an annual report to the legislature embracing a statement of proceedings taken against
banks, of new banks organized, and a summary of all reports (1899, chap. 173, 32).
EXAMINATIONS.

The directors of every bank appoint from their number
an examining committee who make an examination at least
once every six months; this committee reports to the board
with a special view to showing what assets are not of the
value given them on the books (1899, chap. 173, 11). Regular examinations by the commissioner or a subordinate
may be made whenever a commissioner thinks it expedient
or at the request of the bank (1899, chap. 173, 23). The
court of chancery may order an examination by a master
of the court, or by other persons, not exceeding three, appointed by the court, or by one or more commissioners—
see above (1899, chap. 173, 26 and 27).
IV.—RESERVE REQUIREMENTS.

Every bank must keep in available funds an amount
equal at least to 15 per cent of its immediate liabilities;
three-fifths of this reserve may be in balances due from
good solvent banks or trust companies and two-fifths must
be in cash on hand. When reserves fall below, the bank
S. D o c 353, 61-2




27

417

National

Monetary

Commission

m u s t not make any new loans or discounts, except by
buying sight exchange, nor declare dividends out of profits
(1899, chap. 173, 20).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

The total liabilities to any bank of a person, firm, or
corporation for money borrowed, including in firm or corporation liabilities those of t h e members, must never
exceed 10 per cent of the paid-in capital and surplus; this
does not apply t o loans to municipalities, and money borrowed is to be construed not to include discount of commercial paper owned b y the person negotiating it, discount of
bills of exchange drawn against existing values, and discount of paper based on collateral whose actual value is 10
per cent above t h e loan (1899, chap. 173, 18).
No bank m a y loan to officers, directors, or employees,
except upon t h e approval of a majority of the board of
directors or t h e executive committee. No b a n k m a y
allow its officers, directors, or employees t o be liable by
reason of overdrawn account (1899, chap. 173, 12).
No bank m a y loan on the security of its own shares,
unless the security is necessary to prevent loss on a previous debt, in which case the stock must be disposed of
within a year (1899, chap. 173, 15). Among general
powers of banks is t h a t of ''loaning money on real and
personal security " (1899, chap. 173, 6).
VI.—INVESTMENTS.

E v e r y bank m a y hold such real estate as is necessary for
the convenient transaction of its business, including with
its banking offices other a p a r t m e n t s t h a t may be rented
(but this investment must not exceed 25 per cent of capital and surplus); such as is mortgaged to it; such as is
conveyed t o it in satisfaction of previous debts; and such




418

New

Jersey

— State

Banks

as it acquires by sale on judgment or decree in its favor.
Except the banking house, real estate must not be held
longer than five years (1899, chap. 173, 6).
No bank may hold its own stock unless the purchase is
necessary to prevent loss on a previous debt, in which case
the stock must be sold within a year (1899, chap. 173, 15).
VII.—OVERDRAFTS.

The only provision with respect to overdrafts appears
to be that which forbids the officers, directors, or employees of a bank to become liable to the bank "by reason
of overdrawn account" (1899, chap. 173, 12).
X.—UNAUTHORIZED BANKING.

No corporation other than a national bank, a trust company, or a savings bank may be organized to carry on
banking business in New Jersey except under the act of
1899, and except for banks organized under that act, only
savings banks may use the word " b a n k " or "banking"
as part of their name (1899, chap. 173, 1). No bank organized under other laws than those of New Jersey may transact any business in New Jersey, except to the extent that
similar corporations of New Jersey are allowed to do business in the State or country incorporating the bank now
seeking to do business in New Jersey (1907, chap. 35).
XI.—PENALTIES.

Officers, directors, or employees who are implicated in
loans to officers without the consent of the board of directors, or in overdrafts by officers, are guilty of a misdemeanor, punishable by fine of not more than $1,000, imprisonment for not more than five years, or both (1899,
chap. 173, 12). Directors, officers, or employees who
make false statements intended to deceive examiners, or




419

National

Monetary

Commission

subscribe t o or m a k e false reports, are guilty of a " h i g h
m i s d e m e a n o r " (1899, chap. 173, 14). Any b a n k which
fails t o report is subject to a penalty of $100 a day (1899,
chap. 173, 13). Any person who maliciously circulates
statements affecting t h e solvency of any bank, or who
aids another t o circulate such rumors, is guilty of a misdemeanor (1907, chap. 50).

SAVINGS BANKS.
I . — T E R M S OF INCORPORATION.

The savings bank act provides for institutions without
capital stock (1906, chap. 195, 3). At least a majority of
t h e incorporators m u s t reside in the county where the b a n k
is to be located and be freeholders in New Jersey (1906,
chap. 195, 2, amd. by 1908, chap. 39). The commissioner does not allow t h e incorporation unless he believes
t h a t greater convenience of access to a savings b a n k will
be afforded to a considerable number of depositors, t h a t
the density of population in t h e neighborhood will afford
it support, and t h a t the incorporators are fit (1906, chap.
195,8).
Dividends not to exceed 5 per cent a year are regulated
so t h a t as nearly as may be all the net profits are received
by t h e depositors after such an a m o u n t as t h e managers
deem expedient is reserved for a surplus, which m a y accumulate up to 15 per cent of deposits. For dividends,
depositors m a y be divided into classes, so t h a t depositors
in amounts of under $1,000 receive a dividend greater
t h a n depositors of over t h a t amount. When the surplus
amounts to 15 per cent and net profits are accumulated
beyond t h a t point, an extra dividend once every three
years m u s t be paid (1906, chap. 195, 40).




420

New

Jersey

— Savings

Banks

II.—LIABILITIES AND DUTIES OF MANAGERS.

The business of every savings bank is directed by a
board of managers of not less than nine nor more than
fifteen (1906, chap. 195, 15). At least a majority of the
board of managers must reside in the county where the
bank is located and be freeholders in New Jersey (1906,
chap. 195, 17, amd. by 1908, chap. 39). There must be
meetings every three months (1906, chap. 195, 16). A
manager who borrows from the bank or fails to attend
meetings or perform duties for six months vacates his
office (1906, chap. 195, 18). No manager may have any
interest in the gains or profits of the savings bank except
as a depositor, nor may he take any pay for his services
except such compensation for attendance on meetings or
service on committees as may be fixed by a two-thirds vote
of the board (1906, chap. 195, 20 and 23). The managers,
by a committee of at least three of their number, examine
at the end of each year (1906, chap. 195, 42).
III.—SUPERVISION.

The commissioner of banking and insurance exercises
supervision over savings banks. He determines whether
convenience, necessities of the district, and fitness of the
incorporators warrant allowing the incorporation of a proposed savings bank (1906, chap. 195, 8, 9, and 11). He
may reduce the compensation of savings-bank officers if
it is fixed at an excessive amount (1906, chap. 195, 22).
When it appears to the commissioner, from an examination or from a report, that a savings bank has violated the
law, or is conducting its business unsafely, he directs the
discontinuance of the illegal or unsafe practices. Whenever any savings bank does not report, or fails to comply with an order, or it appears to the commissioner that
it is inexpedient to allow the savings bank to continue




421

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Monetary

Commission

business, he causes the attorney-general to institute proceedings for. the removal of managers, or for such other
relief as the facts seem to require (1906, chap. 195, 52).
He may proceed in this way, if it appears that the managers of a savings bank, by keeping permanently uninvested
an undue proportion of the moneys received by them, are
violating the spirit of the rule allowing them to keep temporary deposits pending a chance to invest (1906, chap.
J
95> 37)- If the proceedings by the attorney-general are
directed toward declaring the savings bank insolvent, or
placing it in the hands of a receiver, then the chancellor
of the State may take charge of the savings bank and
manage it (1906, chap. 195, 57). If a savings bank, a
majority of its managers, or three or more depositors holding deposits of $5,000, petition, showing that the bank is
insolvent, the chancellor causes an examination to be
made or a report to be rendered, whereupon he may make
decrees forbidding payments of deposits, etc. (1906, chap.
J
95> 58)- From then on the chancellor has control over
the savings bank and directs the action of its managers
(1906, chap. 195, 59). If under this control the bank,
after a sufficient time, still appears unable to return its
deposits and pay its debts, then the chancellor stops its
business and appoints a receiver. He orders a final distribution of assets and adjudges whether the charter of
the bank is void or not (1906, chap. 195, 60). During the
proceedings the chancellor may always order the reception
of new deposits, keeping the investments of them wholly
for the benefit of those depositing (1906, chap. 195, 61).
The commissioner has supervision over voluntary dissolutions (1906, chap. 195, 63 et seq.).
REPORTS.

A statement of the names and residences of officers and
location of the proposed bank is transmitted to the com-




422

New

Jersey

— Savings

Banks

missioner before any deposits are received (1906, chap.
*95> I 3)- ^ e managers, by a committee of not less than
three of them, examine the affairs of their savings bank
and report the result at the close of business of each
calendar year; this report to the commissioner is made
in January in the form he prescribes. It states the amount
loaned upon bond and mortgage; a list of all bonds and
mortgages upon which interest has been in arrears for six
months; the value of all investments with items; the
amount loaned upon pledge of securities; real estate
investments with values; cash on hand and on deposit;
with names of depositaries and amounts deposited in each.
Also all liabilities, including the amount due depositors,
with dividends, and any other debts or claims chargeable
upon assets; the amount of deposits during the year; the
amount withdrawn; interest or profits received or earned;
dividends credited to depositors; number of accounts
opened and reopened; number closed; number open at the
end of the year; and other reasonable information that
may be required by the commissioner (1906, chap. 195,
42, 43, 44 and 45). The commissioner may call for special
reports when he thinks them necessary (1906, chap. 195,
47). When a receiver of a savings bank has been appointed by the chancellor he reports to the chancellor
every three months (1906, chap. 195, 62).
Dividends declared by the managers or the receiver of
an insolvent savings bank, that are unclaimed for a year,
are published once a week for four weeks (1906, chap.
i95> 2 9)- Every savings bank includes in its annual
report to the commissioner a statement containing the
name of every depositor who has not dealt with his deposit for ten years and whose deposits exceed $50; the
report includes also the amount to the credit of such a
depositor, his last known address, and the fact of his
death, if known. This report is published by the savings




423

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Monetary

Commission

bank once a week for three weeks for two successive years
(1906, chap. 195, 30).
The commissioner of banking and insurance makes an
annual report to the legislature containing a statement of
the condition of every savings bank that has reported
during the preceding year; the name and location of new
savings banks authorized; the date of their incorporation;
and a particular description of those which, whenever
incorporated, have begun business during the preceding
year (1906, chap. 195, 50). The results of all examinations during the previous year are embodied in the annual
report to the legislature (1906, chap. 195, 51), and also
the returns by savings banks of deposits that have not
been disturbed for ten years (1906, chap. 195, 31).
EXAMINATIONS.
The managers, by a committee of not less than three
of them, examine the condition of their savings bank to
show its condition on December 31 of each year, on which
examination their annual report to the commissioner is
based (1906, chap. 195, 42). The commissioner personally
or by a subordinate examines every savings bank at least
once in two years, and oftener if he thinks it necessary
(1906, chap. 195, 51). If a savings bank, a majority of
its managers, or any three or more depositors whose deposits together amount to $5,000 or more, petition the
court of chancery, the chancellor must make an examination (1906, chap. 195, 58).
V.—DISCOUNT, LOAN AND DEPOSIT RESTRICTIONS.

No manager or officer of a savings bank may directly or
indirectly borrow its funds or deposits, nor become surety
for any money borrowed from the savings bank (1906,
chap. 195, 20). No savings bank may loan its deposits




424

New

Jersey

— Savings

Banks

on notes, bills of exchange, or drafts, except upon the additional pledge of collateral of the same sort as that in
which investments are allowed, or the stock of national
and state banks, or the stock or bonds of other New Jersey
corporations which have not defaulted in interest or dividends on the collateral loaned upon, within two years.
Even when secured, the loans must not exceed 80 per
cent of the market value of the collateral and the total
of such loans must not exceed 15 per cent of the total
deposits of the bank (1906, chap. 195, 34).
The deposits to the credit of any one individual or
corporation must never exceed $5,000, exclusive of
accrued interest, except in the case of deposits ordered by
a court. Savings banks need not receive sums less than
$1, nor need they allow interest on fractions of a dollar
or for fractions of a month (1906, chap. 195, 25).
VI.—INVESTMENTS .

Moneys deposited with savings banks may be invested
only as follows: First, in securities of the United States.
Second, in interest-bearing bonds of New Jersey, or those
authorized to be issued by any commission appointed by
the supreme court of New Jersey. Third, in the bonds of
any State which has not within ten years defaulted in
principal or interest of any debt. Fourth, in the bonds
of any municipality of New Jersey, if it has not defaulted
in principal or interest on any debt for five years, and if
certain other requirements are satisfied. In any interestbearing obligations except improvement certificates issued
by the municipality in which the bank is situated. Fifth,
in the bonds of cities or counties of other States, provided
the city or county has not defaulted in principal or interest for ten years, and the total indebtedness is limited
to 10 per cent of the valuation for taxes. Sixth, in first




425

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Monetary

Commission

mortgage or consolidated mortgage bonds of any railroad
company which has paid dividends of 4 per cent on its
entire capital stock for five years. Seventh, in bonds
secured by mortgages t h a t are a first lien on New Jersey
real estate worth double the amount loaned, b u t not
more t h a n 80 per cent of all deposits may be t h u s invested,
and in case the loan is on unimproved or unproductive
real estate the loan must be of not more t h a n 30 per cent
of its value. Loans on bond and mortgage m u s t be
approved by a committee of a t least three managers.
Eighth, in real estate as follows: A plot on which is a
building required for the convenient transaction of the
company's business, from some portion of which rent m a y
be derived, b u t the cost of t h e building and lot m u s t not
exceed 50 per cent of t h e net surplus of the bank unless
t h e commissioner approves; land purchased at judicial
sales on debts due the savings banks, or taken in settlem e n t t o secure such debts, b u t all real estate t h u s acquired
m u s t be sold within five years (1906, chap. 195, 33).
Savings banks m u s t not trade in personalty except
such as is necessary for t h e transaction of the bank's
business. The business of buying and selling exchange,
selling or collecting commercial paper, etc., m u s t not be
engaged in in t h e bank (1906, chap. 195, 68).
To meet current expenses, an available fund of not
exceeding 10 per cent of all deposits m a y be kept on
h a n d or on deposit in solvent state or national banks in
New Jersey, or m a y be deposited on call a t interest in such
solvent t r u s t companies of New Jersey, New York, or
Pennsylvania, or in such solvent national banks of New
York or Pennsylvania as the managers direct. The fund,
moreover, m a y be loaned on pledge of the securities which
are legal investments, provided t h e loan does not exceed 80
per cent of the value of the securities (1906, chap. 195, 36,




426

New

Jersey

— Savings

Banks

amd. by 1908, chap. 203). Temporary deposits may
be made of the excess of daily receipts over payments
pending an opportunity to invest (1906, chap. 195, 37).
X.—UNAUTHORIZED BANKING.

Only such corporations as are authorized by law to
receive deposits as savings banks may advertise or solicit
deposits as such a bank. Any one offending against
these provisions forfeits $100 for each offense each day
that it is continued (sec. 46, of the act approved Apr. 21,
1876).
Savings banks incorporated under other laws than
those of New Jersey are allowed to do business in New
Jersey only to the extent that the government incorporating them allows in its territory savings bank business
to be done by New Jersey savings banks (1907, chap. 35).
XI.—PENALTIES.

Failure to furnish reports subjects the managers
personally to a penalty of $100 a day (1906, chap. 195, 48).
The officers of a savings bank who fail to make a return
of unclaimed deposits are guilty of a misdemeanor and
liable to a fine of not more than $500 (1906, chap. 195, 32).
A receiver of an insolvent savings bank who fails to
report is removed from his office (1906, chap. 195, 62).
Managers or other officers who make illegal investments
or loans are guilty of a misdemeanor, punishable by a fine
of from $250 to $1,000 or imprisonment for not longer
than two years (1906, chap. 195, 35). As in the case of
banks, it is a misdemeanor to spread rumors affecting the
financial standing of a savings bank (1907, chap. 50).




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Commission

TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

Trust companies have authority " t o receive money on
deposit to be subject to check or to be repaid in such
manner and on such terms and with or without interest
as may be agreed upon" (1899, chap. 174, 6).
The capital must be not less than $100,000, divided
into shares of $100 each, all of which must be paid in in
cash before the company begins business. Trust companies must not create more than one class of stock (1899,
chap. 174, 1). The commissioner of banking and insurance does not authorize incorporation unless it appears
to him that the establishment of the proposed trust company will be of public service (1899, chap. 174, 3).
Dividends may be declared out of net profits, but
before the declaration not less than one-tenth of the net
profits for the preceding dividend period must be carried
to a surplus fund until it amounts to 20 per cent of the
capital stock (1899, chap. 174, 13).
Trust deposits must not be mingled with the general
assets or deposits of the corporation; they are not liable
for its general debts (1899, chap. 174, 7).
II.—LIABILITIES AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

There is no particular provision for liability of trust
company shareholders.
There must be not less than five directors, each of whom
must own not less than five shares of stock (1899, chap.
174, 12, amd. by 1906, chap. 191). The directors must
appoint an examining committee to make examinations
explained below (1899, chap. 174, 14).




428

New

Jersey

— Trust

Companies

III.—SUPERVISION.

The commissioner of banking a n d insurance supervises
t r u s t companies (1899, chap. T74> 2 ) - Before acting as
trustee, each t r u s t company must deposit with t h e register of t h e prerogative court certain securities (1899,
chap. 174, 9, amd. by 1903, chap. 214). The commissioner allows a t r u s t company to be incorporated only if
he thinks its establishment will be of public service (1899,
chap. 174, 3).
W h e n it appears to t h e commissioner from a report or
examination t h a t t h e affairs of a t r u s t company are rendered unsound by unsafe investments, or t h a t its liabilities exceed its assets, or t h a t it is violating t h e law, or t h a t
it is inexpedient for it to continue business, then t h e commissioner notifies t h e attorney-general, who institutes proceedings as against an insolvent trust company, or such
other proceedings as the case requires. If upon examination t h e commissioner has reason to think t h a t the
trust company is in an unsound condition, he m a y take
possession of t h e company's business until the termination of t h e proceedings b y t h e attorney-general, or until
the appointment of a receiver (1899, chap. 174, 22). If a
trust company refuses to submit its affairs to examination,
t h e attorney-general, on notice by the commissioner, m a y
proceed as against an insolvent trust company. If it
appears to t h e commissioner t h a t a t r u s t company has
violated law or is conducting its business unsafely, he
directs t h e discontinuance of the practices, and if t h e
company fails to comply with his order, proceedings as
against an insolvent t r u s t company are instituted (1899,
chap. 174, 23). If a trust company becomes insolvent or
suspends business for w a n t of funds, t h e attorney-general
or a creditor or stockholder m a y petition the court of




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Monetary

Commission

chancery for an injunction and the appointment of a
receiver; the court, if satisfied that the company is
insolvent and can not resume business safely, may issue
injunctions, etc.; or if on petition it appears to the court,
on application of the attorney-general, that a trust company is being unsoundly conducted or that its liabilities
exceed its assets, that it has violated the law, that it
refuses to be examined, or that it is inexpedient to allow
it to do business, etc., then injunctions may issue and a
receiver may be appointed (1899, chap. 174, 24 and 25,
amd. by 1906, chap. 157).
REPORTS.

Every trust company makes to the commissioner of
banking and insurance not less than two reports each year,
according to the form prescribed by him, showing the
condition of the corporation at the close of business on a
past day specified by the commissioner. This report
must be transmitted to him within twenty days after the
receipt of his request, and a summary must be published
in a local newspaper. The commissioner may call for
special reports (1899, chap. 174, 16).
The commissioner makes an annual report to the legislature embracing a statement of proceedings taken against
trust companies, of new companies organized, and a summary of all trust company reports (1899, chap. 174, 27).
EXAMINATIONS.

The commissioner or a subordinate makes an examination of the affairs of every trust company whenever he
deems it expedient or at the request of the trust company
(1899, chap. 174, 21). The board of directors of every
trust company appoint from the members of the board an




430

New

Jersey

— Trust

Companies

examining committee to examine the company a t least
every six months, and oftener if required by t h e board,
with special reference to assets which seem to be not of
t h e value at which they are stated on t h e books of the
company (1899, chap. 174, 14).
IV.—RESERVE

REQUIREMENTS.

Every trust company receiving deposits t h a t are subject to check or payable on demand must keep in available funds an amount equal t o 15 per cent of demand
liabilities. Four-fifths of this reserve m a y consist of
balances due from good solvent banks or trust companies,
and one-fifth must be in cash. When the reserve falls
below, the trust company must not make any new loans
except b y purchasing sight exchange, nor m a k e any dividends of its profits (1899, chap. 174, 20).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

No trust company has power to discount commercial
paper, nor t o make loans on bills, notes, or other evidences
of debt except to a New Jersey municipality, unless the
loans are secured by mortgage upon lands, or b y other
securities whose market value exceeds b y 10 per cent
the amount of the loan (1899, chap. 174, 7). No trust
company may loan to its officers, directors, or employees
until the board of directors or the executive committee has
approved of t h e loan by a majority vote. No trust company may permit its officers, directors, or employees to
become liable to it b y reason of overdrawn account (1899,
chap, 174, 15). No trust company may loan on the
security of its own shares unless acceptance of this security is necessary t o prevent loss on a previous debt. Stock
so acquired must be disposed of within a year (1899, chap.
174, 18).




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Commission

VI.—INVESTMENTS.

Among trust company powers is the power to hold all
real property necessary for the convenient transaction of the
company's business, and real property acquired in satisfaction of debts under judgment, mortgage, etc., or in
settlement of debts. Trust companies also may buy and
sell stocks, promissory notes, bonds, mortgages, and other
securities (1899, chap. 174, 6). No trust company may
purchase or hold shares of its own stock unless the purchase is necessary to prevent loss upon a previous debt,
in which case the stock must be disposed of within a year
(1899, chap, 174, 18).
VII.—OVERDRAFTS.

No trust company may permit its officers, directors, or
employees to become liable to it "by reason of overdrawn account" (1899, chap. 174, 15).
X.—UNAUTHORIZED TRUST COMPANY BUSINESS.

No corporation may be organized to do a trust company
business in New Jersey except under chapter 174 of 1899,
and no company organized under any other act may use
the word " t r u s t " as part of its name (1899, chap. 174, 1).
Trust companies incorporated under other than New
Jersey law are allowed to do business in New Jersey to
the extent that New Jersey trust companies are allowed
to do business in the incorporating State (1907, chap. 35).
XI.—PENALTIES.

Any officer, director, or employee of a trust company
who is implicated in a loan to an officer without the consent of the directors, or an overdraft by an officer (1899,




432

New

Jersey

— Trust

Comp

antes

chap. 174,15); any person who maliciously circulates false
rumors affecting the financial condition of a trust company (1907, chap. 50); and any director, officer, or employee who makes false entries, false reports, etc., with
intent to deceive an examiner, or subscribe*to or make
false reports, is guilty of a misdemeanor, and in the last
case of a high misdemeanor (1899, chap. 174, 17). Every
trust company which fails to report is subject to a penalty
of $100 a day (1899, chap. 174, 16).

S- Doc 3 53, 61-2




28

433

NEW MEXICO.
The latest revision of the laws of the Territory of New
Mexico was published in 1897. Title 3, beginning at page
157, deals with " Banks and banking." There are various
amendments to sections in this title in the session laws of
1899, 1901, 1903, 1905, and 1907. Transcripts of two
statutes of 1909, chapters 96 and 133, have been procured
from the territorial banking officials, who state that these
are the only 1909 laws which affect the digest; they are
digested under the proper headings. The title on banks
and banking in the Compiled Laws is divided into two
parts, the first dealing with banks of discount and deposit
and based chiefly on a statute of 1884, the second dealing
with savings banks and based entirely upon a statute of
1887. These two halves of the title seem quite independent and conform to the plan of the digest, in treating
first of banks and then of savings banks. Trust companies
are legislated for in chapter 52 of 1903. It is worth
noting that the savings bank statute, in its first section,
provides for the incorporation of " savings banks and
trust associations," but in the light of the complete and
more recent legislation on trust companies, it seems
unreasonable to consider the savings bank statute as possibly applicable to trust companies. Chapter 54 of
1903 transfers the supervisory duties with respect to
banks and savings banks formerly incumbent upon the




434

New

Mexico

— State

Banks

secretary and the treasurer of the Territory to a new officer created by the act and called ''the traveling auditor
and bank examiner.'' Since chapter 54 of 1903 shifted
to the traveling auditor and bank examiner only those
supervisory duties which had been in the hands of the
secretary and the treasurer of the Territory, it was doubtful
if under that statute the auditor, who had exercised
supervision over trust companies, could properly be
deprived of his former powers; chapter 96 of 1909, however, provides in section 9 that trust companies are to
be placed " under the direct supervision of the bank
examiner.'' On the strength of this provision the digest
even with "respect to trust companies treats the traveling
auditor and bank examiner as the only supervisory
officer. Chapter 96 of 1909 refers to the official simply
as "the bank examiner;" his full title as stated above
is,under the act establishing the office/'traveling auditor
and bank examiner." References in the digest, where
they are simply numbers in parenthesis, are to sections
in the Compiled Laws; later statutes are referred to by
year of passage, chapter, and, where necessary, section.
BANKS.
I.—TERMS OF INCORPORATION.

The capital of " a bank of discount and deposit" must
not be less than $30,000, and before the bank begins business at least 50 per cent must be paid in in cash; the
remainder must be paid in in cash within a year (244).
The directors, semiannually or oftener, on the first
Monday in January and July, may declare a dividend, but
only out of net profits (250). No dividends are payable




435

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Commission

on shares whose holders are liable, on debts past due, to
the bank (247).
In towns of less than 1,500 inhabitants corporations may
be organized for trade and business, which may, in addition, transact a general banking business. These corporations must have a capital of not less than $30,000, of
which not less than $20,000 must be paid in before banking
is begun. The right to transact a banking business, moreover, is not continued beyond a year unless the whole of
the capital is paid up within that time. Existing corporations in cities or towns of less than 1,500 inhabitants
may take advantage of the statute allowing incorporation
for these combined purposes when their capital stock has
been paid in in accordance with the act; such corporations
must, however, be capitalized at not less than $30,000.
The accounts of the banking business must be kept separate from those of the regular mercantile business (1903,
chap. 109).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

The officers and stockholders of banking corporations
are individually liable for all debts contracted during the
term of their being officers or stockholders "equally and
ratably to the extent of their respective shares of stock in
any such corporation or association," except that the liability ceases one year from the date of transfer of stock
(252)., A shareholder has no vote while his obligations
held by the bank are past due (246).
There must be not more than nine directors, elected
annually (246). If a report is not made within a month
of the time it is due, or if the bank wilfully violates the
statute, the directors become liable personally for all debts
contracted previous to and during the neglect (251).




436

New

Mexico

— State

Banks

III.—SUPERVISION.

The official charged with the supervision of banks is the
• " traveling auditor and bank examiner,'' who is appointed
by the governor for terms of two years, must be a skilled
accountant, and receives a salary of $2,000" a year with
$1,200 additional for expenses (1903, chap. 54, 1). All
the duties formerly put upon the secretary or treasurer of
the Territory with respect to banks, savings banks, and
trust companies now belong to the traveling auditor and
bank examiner (1903, chap. 54, 9). If it appears to him
that any bank is insolvent (as defined in 1909, chap.
96, 7) it is his duty to report to the governor, who, if it
appears that such a proceeding is necessary, directs the
bank examiner to take charge of the bank and of its
property. The examiner thereupon makes a thorough
examination and reports to the governor, who, if satisfied
that the bank can not resume business or liquidate its
debts to the satisfaction of its creditors, advises the
attorney-general to institute proceedings for a receiver.
The bank examiner with the governor's consent may
appoint a deputy to take charge of an insolvent bank
pending the appointment of a receiver, no bank, however,
to remain in charge of a deputy longer than ninety
days (1909, chap. 96, 4). A bank may voluntarily
place its affairs under the control of the examiner by
posting a notice on its doors (1909, chap. 96, 5). If it
appears that the capital of a bank has been impaired,
the examiner notifies the bank to make the impairment
good in ninety days (1909, chap. 96, 8).
REPORTS.

Banks make semiannual reports in January and July in
the form prescribed by the traveling auditor and bank
examiner, which reports show resources and liabilities




437

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Monetary

Commission

at the close of business on a past day specified by
the examiner, and must be transmitted to him within
five days after his request. They must be published in a
local newspaper (1909, chap. 96, 1).
The foregoing late enactment seems to supersede the
section formerly in force, which, after providing for the
declaration of dividends " semiannually or oftener, as
they (the directors) may elect, on the first Monday in
January and July," proceeded: "On each of such days
the president or cashier shall make'' a full statement to
the bank examiner of the condition of the bank "on
that day after declaring the dividend, if any be declared/'
The statement was required to contain a full abstract of
the accounts of the bank so as to show its resources and
liabilities. It was published once a week for three weeks
in a local newspaper (250, and 1903, chap. 54, 9).
The bank examiner reports to the governor all his
official doings as examiner, embodying in his report an
abstract of the condition of the assets and liabilities of
the institutions under his charge, with general suggestions
and recommendations (1903, chap. 54, 11).
Banks which have in their possession money against
which no check has been drawn, or of which no other disposition has been made, by the owner within three years,
must annually publish for six days in a local newspaper a
list of the names of such depositors, with the amount to
the credit of each, etc. (1899, chap. 62).
For reports required for purposes of taxation see 257,
et seq, with amendments in 1907, chap. 103.
EXAMINATIONS.

The bank examiner visits each bank doing business in
New Mexico except national banks at least annually, and
oftener if necessary, in order to make a full investigation
into its condition (1909, chap. 96, 2).




438

New

Mexico

— State

Banks

This late enactment does not materially change t h e
older one under which he was required t o visit " e a c h
of t h e banking, savings, and other moneyed corporations
created under t h e laws of t h e T e r r i t o r y " and thoroughly
examine it a t least once a year, verify t h e validity and
a m o u n t of its securities and assets, and inquire into its
observance of t h e law (1899, chap. 54, 6). A provision
of t h e Compiled Laws provided t h a t the secretary of the
Territory (whose duties have now devolved upon t h e b a n k
examiner under 1903, chap. 54, 9, and 1909, chap. 96, 9)
might at any time appoint a suitable person to examine
" any corporation incorporated under this act (the savings
b a n k statute) or any other law of this T e r r i t o r y / ' or
might make such an examination himself to determine
the t r u t h of any statement m a d e by the b a n k or to determine its solvency and t h e character of its assets (280).
Under t h e 1909 s t a t u t e t h e b a n k examiner upon taking
charge of a b a n k must examine its affairs before receivership proceedings are instituted, and m a y make an examination of any b a n k which is voluntarily liquidated (1909,
chap. 96, 4 and 6).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

Any b a n k of discount and deposit m a y " c a r r y on t h e
business of banking by discounting on banking principles
upon such securities as t h e directors or trustees shall deem
expedient, * * * by loaning money on personal security and by exercising such incidental powers as m a y
be necessary t o carry on such corporation, association, or
business" (246).
The savings bank s t a t u t e contains provisions for t h e
m a x i m u m amount of individual loans and for curtailing
loans to directors and officers (276); b u t there seems no
reason to suppose t h a t these provisions are applicable t o
commercial banks. The stockholders collectively of any




439

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Monetary

Commission

bank must never be liable, either as principal or surety or
both, to an amount greater than two-fifths of the paid in
and unimpaired capital (253).
No bank may take as security a lien on any part of its
capital; the same security is required of shareholders as
of others (244).
For provisions for deposits of territorial moneys see 255.
VI.—INVESTMENTS.

A bank may carry on its business "by buying or selling
the bonds or stocks of this or any other State or Territory,
or of the United States; also the bonds of any county,
city, town, or school district in this Territory legally
authorized to issue such bonds; gold and silver bullion;
foreign coins and bills of exchange" (246).
It is lawful for a bank to hold real estate only for the
following purposes: Such as is necessary for its accommodation in business; such as is mortgaged to it for previous
loans; such as is conveyed to it in satisfaction of previous debts; and such as it purchases under judgments or
mortgages held by it; but at such a sale the bank must
not bid more than necessary to satisfy the debt and costs
(248 and 249).
No bank may "be the holder or purchaser" of its own
stock or the stock of any other corporation unless the purchase is necessary to prevent loss on a previous debt contracted on security which was thought adequate at the
time; stock so purchased must not be held for longer than
six months if it can be sold for what it cost or at par (244).
VIII.—BRANCHES.

The only hint on this subject is that contained in the
requirement of a certificate by the incorporators, which
must state " t h e place where the operations of discount




440

New

Mexico

— State

Banks

and deposits of such banking corporation or association
are t o be carried on, designating the particular county,
city, or town, at which place such association shall keep
a n office for t h e transaction of its business " (245).
X.—UNAUTHORIZED BANKING.

I t is unlawful for persons, companies, or associations
other t h a n national banks to carry on a banking business
in New Mexico without compliance with t h e provisions of
t h e bank statute. Contracts made with banks doing business in violation of the s t a t u t e are void (254, amd. by
1899, chap. 40).
XI.—PENALTIES.

Any officer of " a n y banking, moneyed l or savings institution or other moneyed corporation of this t e r r i t o r y "
who fails t o furnish reasonable facilities to t h e examiner
is guilty of a misdemeanor, punishable b y a fine of not less
t h a n $500, imprisonment for not less t h a n six months, or
both (1903, chap. 54, 8). Any person who refuses t h e
examiner access to books or papers or who hinders t h e
complete examination of such an institution is also guilty
of a misdemeanor, punishable by the same penalties (1903,
chap. 54, 10). A failure by " a n y banking h o u s e " to comply with t h e provisions of the act requiring reports of unclaimed deposits to be published renders each director
and managing officer guilty of a misdemeanor, punishable
b y six m o n t h s ' imprisonment (1899, chap. 62, 3). Failure
to m a k e a regular semiannual report is punishable b y fine
of $50 a d a y (1909, chap. 96, 1). Failure by t h e proper
officer of any bank to make the report required for taxation purposes entails a forfeit of $1,000 (258).
If the president, director, or other officer of any banking
institution is implicated in receiving a deposit, or in t h e
creation of any debt by his bank in consideration of which




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money or property is received into the bank, after he has
knowledge that the bank is insolvent or failing, he is
guilty of larceny (254, amd. by 1899, chap. 40). See also
Savings banks, XI, for the sections of the savings bank
statute, which provide for these offenses (282 and 283);
these sections seem to be applicable to banks, as well as
savings banks, for they forbid the officers of "any bank
or banking institution organized or doing business under
the provisions of this act or of any law of this territory"
to receive deposits during insolvency, and provide the
penalty for this offense when committed by officers "of
any bank or banking institution."
SAVINGS BANKS.
I.—TERMS OF INCORPORATION.

The first of the sections headed in the Compiled Laws
"Savings banks" provides for the incorporation of ''savings banks and trust associations," the capital of which
must not be less than $30,000, except in cities and towns
of less than 3,000 inhabitants, in which the capital must
not be less than $15,000. All the capital must be paid in
in cash before business is begun (260, amd. by 1901,
chap. 56).
Each savings bank must create a surplus from its net
earnings by setting apart at least 10 per cent of them
semiannually until the surplus amounts to 40 per cent of
capital (268). The directors may, in January and July,
declare a dividend, if it has been earned, provided the
savings bank is fully solvent without the earnings which
it is proposed to divide; no dividend may be declared
when the capital is impaired so as not to be worth in good
resources the full amount paid in after the payment of all
liabilities, nor when the provisions respecting surplus
fund have not been fully complied with (266). No divi-




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Banks

dends may be paid on stock the holder of which is liable
on debts past due to the savings bank; dividends must be
applied to discharge the liabilities (265).
A savings bank may issue and negotiate its own evidences of indebtedness to an amount not exceeding 90 per
cent of the aggregate of the loans made and held by the
savings bank and secured by mortgages of real estate (263).
II.—LIABILITIES AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

The stockholders of a savings bank " shall only be individually liable to the extent of the par value of the
shares of stock subscribed for by them" (273).
There must be not more than nine directors (264). Any
director who assents to declaring and paying a dividend
while the capital is impaired is personally liable to the
amount of his proportion of the dividend if losses occur
on account of its payment (266). If a savings bank fails
to make required reports or wilfully violates the savings
bank statute, the directors are personally liable for bad
debts contracted previous to and during the period of the
neglect (272). Directors or other officers who are implicated in receiving deposits or creating debts with knowledge of the insolvency of the bank are individually responsible for the deposits received or the debts created (282).
III.—SUPERVISION.

The same official is in control of savings banks (see
Banks, III) as of banks.
See Banks, III, for the provisions of the 1909 statute
which require the examiner to report the insolvency of a
bank to the governor and institute receivership proceedings, appointing a deputy to act as temporary receiver if
necessary; also for the provisions allowing a bank to place




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itself voluntarily in t h e hands of t h e examiner; and for
those under which t h e b a n k examiner requires impairment
of capital to be m a d e good within ninety days (1909,
chap. 96, 4, 5, and 8). I t is not altogether clear t h a t
these provisions are applicable t o savings b a n k s ; t h e statu t e states t h a t "for t h e purpose of examination and
regulation t h e provisions of this act are hereby m a d e
applicable and extended t o t r u s t companies, banks,
building and loan associations, and all territorial institutions; it is t h e intent and purpose by this section t o place
these institutions under t h e direct supervision of t h e b a n k
e x a m i n e r " (1909, chap. 96, 9). There is an older provision for action by t h e examiner when he considers a
corporation in an unsafe condition t o continue business,
which, if not superseded by t h e 1909 act, applies clearly
t o savings banks. I t provides for action b y t h e examiner,
culminating in t h e appointment of a receiver (280, and
1903, chap. 54, 9).
Other provisions of t h e Compiled Laws, probably still
effective, enact t h a t when t h e capital of a savings b a n k is
impaired t o t h e extent of 25 per cent by reason of b a d
loans or otherwise t h e savings b a n k m u s t cease t o do
business unless its capital is m a d e good b y assessment
within sixty days or reduced t o offset t h e impairment
(266).
REPORTS.

See above, under Supervision, for t h e possible application of chapter 96 of 1909 t o savings banks. Under t h a t
chapter " all b a n k s heretofore or hereafter organized under
t h e laws of t h e Territory, including private b a n k s , " m u s t
m a k e semiannual reports in J a n u a r y and July in t h e form
prescribed by t h e examiner, exhibiting resources a n d
liabilities at t h e close of business on a past day specified
b y t h e examiner, reports t o be transmitted within five




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Banks

days after the request and to be published in a local newspaper (1909, chap. 96, 1). If the language of chapter 96
of 1909 does not make this provision for reports applicable
to savings banks, the provisions of the following paragraph cover the point:
The directors of a savings bank must, semiannually,
in January and July, and whenever any dividends are
declared, make a full statement to the bank examiner of
the condition of the savings bank on that day, after the
dividend, if any, has been declared; the statement must
show fully the general accounts of the corporation and its
resources and liabilities with details, and must be published once a week for three weeks in a local newspaper
(269, and 1903, chap. 54, 9). The bank examiner may
call upon any savings bank to make such a statement
at any time, though it be more than the second time
within a year; he must give no notice to anyone of the day
on which he will call for such a statement, which must
show the actual condition of the bank at the close of business upon a designated day prior to the call (270, and 1903,
chap. 54, 9).
The examiner makes a written report to the governor
as stated under Banks (1903, chap. 54, 11).
The statute requiring the publication of reports of unclaimed deposits (see Banks, III) applies to "all national
and territorial banks having banking houses in this Territory" (1899, chap. 62).
For reports for purposes of taxation see 1903, chapter
103.
•

EXAMINATIONS.

Under chapter 96 of 1909 the bank examiner must
visit each and every bank doing business in the Territory
of New Mexico except national banks" at least once a
year, and oftener if necessary, to make full investigation
into its condition (1909, chap. 96, 2).
11




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The older provision for examinations at least once a year
by the traveling auditor and bank examiner (see Banks,
III) includes savings banks. It particularly requires, with
respect to savings banks, that he examine the validity of
the mortgages they hold (1903, chap. 54, 6). A provision
of the savings-bank statute in the Compiled Laws is that
the secretary of the territory (whose duties have now devolved upon the bank examiner—1903, chap. 54, 9) may
appoint some one to make examination of a savings bank,
or make the examination himself, to determine the truth
of any statement made under the provisions of the act or
to determine the solvency of the savings bank and the
character of its assets (280).
If savings banks are subject to the regulation features
of chapter 96 of 1909, the bank examiner, when he has
taken charge of a savings bank as insolvent, makes a
thorough examination, and also may examine banks in
voluntary liquidation (1909, chap. 96, 4 and 6).
V.—DISCOUNT AND LOAN RESTRICTIONS.

A savings bank may conduct the business of "loaning
money upon real estate or personal property and upon
collateral, personal, or live-stock security, at a rate of interest not exceeding that allowed by law; and also of buying, selling, and discounting negotiable and unnegotiable
paper of all kinds, as well as all kinds of commercial
paper" (262).
No savings bank may loan its money to any individual
or corporation, directly or indirectly, or perijiit any individual or corporation to become at any time indebted to
it in a sum exceeding 10 per cent of its paid-in capital, or
permit a line of loans to any greater amount to any individual or corporation; nor may a savings bank hold the
name of any of its directors or officers as principal or




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Banks

surety upon paper, or to an amount greater than 5 per
cent of its capital, unless the borrower deposits with the
savings bank collateral security or executes a mortgage
of personalty or realty (276).
No savings bank may accept improved real estate as
security for a greater amount than 50 per cent of its
value; nor unimproved real estate for a greater amount
than 30 per cent; nor live stock for a greater amount
than 40 per cent (277).
A savings bank may issue and negotiate its own evidence of indebtedness to an amount not exceeding 90 per
cent of the aggregate loans made and held by the bank
and secured by mortgages on real estate (263). Savings
banks may deposit in New Mexico banks or national
banks (275).
VI.—INVESTMENTS.

Savings banks may conduct the business of "buying
and selling gold, silver, coins of all kinds, uncurrent money;
* * * and also the buying and selling of bonds and
stocks of this or any other Territory or State, or of the
United States; also the bonds or other evidences of
indebtedness of any county, city, town, or school district
in this or any other Territory or State legally authorized
to issue such bonds or evidences of indebtedness" (262).
No savings bank may employ its moneys in trade or commerce by buying and selling merchandise; but it may sell
all kinds of property acquired as collateral or in the collection of debts (278).
A savings bank may hold real estate only as follows:
First, a plot on which buildings requisite for its business
are erected, from portions of which rent may be derived,
the cost of the buildings and lot never to exceed 50
per cent of the net surplus of the bank; second, such
real estate as the bank has purchased on foreclosure of




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mortgages owned by it or upon judgments for debts due
it or in settlements to secure such debts. The second
sort of real estate must be sold within five years (279).
A savings bank may deposit the moneys deposited with
it, or its surplus funds or unemployed capital, in a New
Mexico bank or a national bank (275).
VIII.—BRANCHES.

The only intimation in the statutes on this subject is
in the provision that the incorporators shall certify " t h e
principal place where the business of such corporation
shall be carried on, designating a particular county, city, or
town at which place such corporation or association shall
keep an office for the transaction of its business" (261).
XI.—PENALTIES.

If the president or other officer or director of a savings
bank refuses to make statements required by the bank
examiner, or makes a false statement, the offender is
guilty of a misdemeanor punishable by fine for each
offense of $100 to $500, or imprisonment for from one to
twelve months, or both fine and imprisonment (271). If
a savings bank or its officers or directors fail to publish a
statement for one month beyond the time when it is
required to be made, or willfully violate any provision of
the savings bank statute, the directors become personally
liable for bad debts contracted previous to and during the
neglect (272). Every director and managing officer of a
"banking house" which fails to publish unclaimed deposits
is guilty of a misdemeanor, punishable by six months'
imprisonment (1899, chap. 62, 3). The provisions given
under Banks, XI, respecting penalties for failing to furnish facilities to the bank examiner (1903, chap. 54, 8)
and those respecting penalties for refusing access to the




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bank examiner to books or papers (1903, chap. 54, 10)
apply to savings banks. If savings banks are required to
report semiannually under chapter 96 of 1909, they are
subject to the penalty of $50 per day during any delay in
making a report (1909, chap. 96, 1).
Any president, director, or other officer or agent of a
bank organized or doing business under the savings bank
statute or any law of the Territory who is implicated in
receiving deposits or in the creation of debts by the institution with knowledge of its insolvency is individually
responsible for the deposits or debts (282); one who willfully commits this offense and fails to make good the loss
to the persons damaged within sixty days after the insolvency of the bank has been judicially determined is guilty
of a misdemeanor punishable by fine for each offense of
$100 to $500, or imprisonment of from one month to
twelve months, or both fine and imprisonment (283).
The provision on this topic given under Banks, XI, providing that such an offense shall be larceny, seems applicable to savings banks as well as to banks (254, amd. by
1899, chap. 40).
TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

Trust company powers are enumerated in 1903, chapter
52, 3. A trust company may ''receive upon deposit for
safe keeping money and personal property of every description." A majority of the fifteen or more incorporators of a trust company must be residents of New
Mexico. The capital actually subscribed in good faith
at the time of filing the articles must be not less than
$250,000, of which $100,000 must have been actually
paid in lawful money (1903, chap. 52, 1 and 9). A 1909
amendment allows the incorporation of a trust company
S. Doc. 3 53, 61-2




29

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in any city, town, or village of less than 7,000 with an
actually subscribed capital stock of not less than $100,000,
of which not less than $50,000 must have been actually
paid in (1909, chap. 133, 1 and 3).
Dividends may be declared semiannually or annually
of so much of the net profits as the directors judge expedient, but before the declaration of the dividend at
least one-tenth of net profits for the preceding half year
or year must be carried to surplus fund until it amounts
to 20 per cent of the paid-in capital. No dividend may
be declared until at least $250,000 of capital has been
paid in in the case of trust companies in communities of
over 7,000; in those under 7,000, a trust company may not
declare a dividend until its entire capital has been paid in.
Dividends must never exceed net profits on hand (1903,
chap. 52, 7, amd. by 1909, chap. 133, 2).
II.—LIABILITIES

AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

The shareholders of every trust company are individually responsible for its contracts to the extent of
the amount of their stock at par in addition to the amount
invested in the shares (1903, chap. 52, 15).
There must be not fewer than five directors, each the
owner of not less than 10 shares of capital; a majority
must be citizens of New Mexico. The term of office is
regularly one year (1903, chap. 52, 17, amd. by 1903,
chap. 115).
III.—SUPERVISION.

The following provisions of chapter 96 of 1909 are
applicable to trust companies: If at any time it appears to
the bank examiner that a bank is insolvent he reports to
the governor, who, if it appears that such a proceeding is
necessary, directs the examiner to take charge; the exam-




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antes

iner then examines thoroughly and makes a return to the
governor, who, if satisfied that the company can not resume
business or pay its debts, advises the attorney-general to
proceed for a receiver, pending whose appointment the
examiner may place the affairs of the company for not
longer than ninety days in charge of a special deputy
(1909, chap. 96, 4). A trust company may voluntarily
place its affairs under the control of the examiner by posting a notice on its doors (1909, chap. 96, 5). When it
appears that the capital of a trust company has been
impaired, the examiner notifies it to make the impairment
good within ninety days (1909, chap. 96, 8).
The provisions of the paragraph next following were
law before the enactment of chapter 96 of 1909, with the
powers and duties mentioned in the hands of the territorial
auditor; since they seem not clearly repealed by chapter
96, they are inserted below with the examiner substituted
for the territorial auditor. It is possible that this substitution may not be altogether justified by chapter 96,
which provides in section 9 that "for the purpose of
examination and regulation the provisions of this act are
hereby made applicable and extended to trust companies;
* * * and it is the intent and purpose of this section to
place these institutions under the direct supervision of the
bank examiner."
The examiner notifies any trust company whose
reserve is below the requirement, and if the company
fails to make the reserve good in sixty days, he
may take charge, close the company's doors, make a
thorough examination, and take such proceedings as
the situation requires (1903, chap. 52, 10); he may act
similarly whenever a trust company fails to report for a
period of thirty days after the time the report is due
(1903, chaps. 52, 11) or refuses to submit to examination
(1903, chap. 52, 12), and whenever the capital of a trust




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company, having become reduced below t h e requirement,
is not m a d e good by assessment on the shareholders
within three months of his requiring t h e deficiency t o be
repaired. When it appears to him t h a t a trust company
has violated its charter or any statute, or is conducting
its business in an unsafe and unauthorized manner, he
orders t h e company to discontinue these practices; a n d
whenever, from a thorough examination of its affairs,
it appears to him t h a t it is unsafe for the company to
continue business, he m a y take charge, close t h e company's doors, and report t h e facts to the governor, who
m u s t require proceedings to be instituted for t h e appointm e n t of a receiver (1903, chap. 52, 15). Failure t o sell
within six months its own shares acquired under t h e
provision permitting their acquisition to prevent loss on
a previous debt, is ground for t h e appointment of a receiver (1903, chap. 52, 8).
The auditor of t h e Territory (probably now t h e examiner—1909, chap. 96, 9) has authority to designate reserve
depositaries; apparently any national, state, or territorial
b a n k m a y be a depositary and any trust company which
he designates (1903, chap. 52, 10).
There is provision for a deposit of cash or securities on
t h e strength of which a trust company m a y serve in a
fiduciary capacity without giving a bond (1903, chap.
52, 6).
REPORTS.

Chapter 96 of 1909, applying under its express terms
t o t r u s t companies, requires t h e m to m a k e semiannual
reports in J a n u a r y and July t o t h e b a n k examiner in the
form which he prescribes, exhibiting resources and liabilities a t t h e close of business on a past day specified b y
him, t h e report to be transmitted within five days after
t h e request, and to be published in a local newspaper
(1909, chap. 96, 1).




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Under previous legislation trust companies were required to report to the territorial auditor four times a
year, showing in detail resources and liabilities of the
company at the close of business on a past day specified by
the auditor; each report was transmitted to him within
fifteen days after the receipt of his request, and was published in a local newspaper. The auditor might call for
special reports whenever they seemed necessary (1903,
chap. 52, 11).

Receivers of trust companies report, when required, to
the appointing court (1903, chap. 52, 15). See Banks, III,
for report of bank examiner to governor (1903, chap. 54,
11). The publication of unclaimed deposits is not required of trust companies unless they can be brought
within the description, "territorial banks having banking
houses in this Territory" (1899, chap. 62). See 1907,
chap. 103, for reports for taxation purposes required of all
" joint stock associations doing a banking business."
EXAMINATIONS.

The bank examiner under the 1909 statute visits every
trust company at least annually, and oftener if necessary,
for the purpose of making a full investigation into its
condition (1909, chap. 96, 2). He examines thoroughly
when he takes possession prior to the institution of receivership proceedings (1909, chap. 96, 4); and he may
examine in voluntary liquidations (1909, chap. 96, 6).
The above provision for regular annual examinations is
a parallel to the earlier legislation which required the
examiner to visit at least once in each year without prior
notice "each of the banking, savings, and other moneyed
corporations created under the laws of the Territory"
and thoroughly examine them (1903, chap. 54, 6). It
seems to override, however, still another earlier statute
which required the auditor semiannually and at such




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other times as he deemed necessary, to make a thorough
examination into t h e affairs of every t r u s t company either
personally or through a suitable person appointed b y him
(1903, chap. 52, 12).
IV.—RESERVE

REQUIREMENTS.

E v e r y t r u s t company m u s t keep on hand in lawful
money of the United States an amount a t least equal t o 15
per cent of its aggregate liabilities other t h a n those for
which a deposit with the State is required to be made.
Whenever its reserve falls below the requirement t h e
corporation must not increase liabilities by making new
loans, nor m a k e dividends, until the reserve has been
restored. The auditor m a y notify a trust company
whose reserve is below the requirement to make it good,
and if it fails for sixty days he proceeds as stated under
Supervision. Three-fifths of the reserve m a y consist of
balances due from any national, state, or territorial banks
or from any trust companies designated b y t h e auditor
(1903, chap. 52, 10).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

Among trust company powers is t h a t " t o loan money
upon real-estate, personal and collateral s e c u r i t y " (1903,
chap. 52, 3, amd. by 1905, chap. 78, 1). No trust comp a n y may loan or discount on the security of shares of its
own stock, except to prevent loss on a previous debt, in
which case t h e stock must be disposed of within six
months. The total liabilities to a trust company of any
person, firm, or corporation, including in firm or corporation liabilities those of the members, must never exceed
20 per cent of paid-in capital. The total liabilities of a
director, officer, or employee t o his company must never
exceed 10 per cent of paid-in capital (1903, chap. 52, 8).




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Trust companies may become depositaries of territorial moneys to an amount not exceeding 40 per cent of
their paid-up capital (1903, chap. 52, 16).
VI.—INVESTMENTS.

Among trust company powers are those " t o purchase,
invest in, and sell all kinds of government, state, municipal, and other bonds and all kinds of negotiable and nonnegotiable paper and other investment securities" (1903,
chap. 52, 3, amd. by 1905, chap. 78, 1).
No trust company may purchase shares of its own
stock, unless the purchase is necessary to prevent loss on
a previous debt, in which case the stock must be sold
within six months (1903, chap. 52, 8).
A trust company may purchase or lease real estate for
use in conducting its business; it may purchase real
estate under its own foreclosure proceeding, judgment, or
lien, or whenever it may be necessary to protect itself
from loss, but such real estate must be sold as speedily as
possible (1903, chap. 52, 20).
VIII.—BRANCHES.

The articles of agreement must set out "the name of
the particular city or town and county in which the business of the corporation is to be carried on" (1903, chap.
52, 1); the trust company statute contains no further hint
with respect to doing business at branch offices.
XI.—PENALTIES.

Trust companies may only advertise their actually paidin capital, surplus, and undivided profits, and not their
authorized capital, unless it is fully paid up; the penalty
for violating this provision is $100 to $500 for each offense
(1903, chap. 52, 9). Failure to report entails a penalty




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of $50 a day (1903, chap. 52, 11, a n d 1909, chap. 96, 1).
Refusal to submit to an examination entails a penalty of
$1,000 on t h e corporation, and $500 on any particular oflficer
or director who refuses (1903, chap. 52, 12). See also chapter 54 of 1903, which creates t h e office of traveling auditor
a n d bank examiner; under t h a t s t a t u t e any officer " of any
banking, moneyed, or savings institution or other moneyed
corporation of this territory " who fails to furnish facilities
t o t h e traveling auditor and bank examiner at examinations,
is guilty of a misdemeanor, punishable by fine of not less
t h a n $500 or imprisonment for not less t h a n six m o n t h s ,
or both fine and imprisonment (1903, chap. 54, 8), and
any person refusing t h e traveling auditor and b a n k examiner access to books, etc., or hindering examination as
required under the statute, is guilty of a misdemeanor
punishable b y t h e same penalties (1903, chap. 54, 10).
If the president, director, agent, etc., of a t r u s t comp a n y embezzles or issues without authority any certificate
of deposit, etc., or makes a false entry, report, or statement with intent to defraud the corporation or any other *
company or individual, or to deceive an officer of t h e corporation or an examiner, is, together with those who aid
him, guilty of a misdemeanor, for which the penalty is
imprisonment for from five to ten years (1903, chap.
52> 14)The provision making it larceny to receive deposits
while insolvent (see Banks, I I I ) applies t o every " b a n k i n g
i n s t i t u t i o n " (254, a m d . by 1899, chap. 40).




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NEW YORK.
T h e S t a t e of New York has a complete banking law
containing general provisions, and provisions dealing
with banks, with savings banks, and with t r u s t companies separately. Individual bankers are, when they accept t h e benefits of the banking law, for the most part
treated as banks are. There is separate legislation also
for building and loan associations; cooperative loan associations; mortgage, loan, and investment corporations;
safe deposit companies and associations for loaning money
on personal property. The digest treats separately banks,
savings banks, and trust companies, with as little repetition as possible, inserting the provisions applicable to all
corporations subject to t h e banking act, only once, under
" B a n k s . " Elaborate provisions for circulation (sees.
83-106) are omitted. The legislature of 1909 enacted a
new revision of the statutes of the State, known as the
Consolidated Laws, of which the banking law is chapter 2;
references, where they are merely numbers in parentheses,
are to sections in t h a t chapter.
BANKS.
I . — T E R M S OF INCORPORATION.

The superintendent of banks, when the necessary
formalities have been complied with by proposed incorporators, determines, weighing their character and fitness
and the needs of t h e locality, whether it is expedient and




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desirable for them to incorporate as a bank (63). The
capital of banks in villages not exceeding 2,000 must be
not less than $25,000; in cities, villages, or towns exceeding 2,000 and not exceeding 30,000, it must be not less
than $50,000; and elsewhere it must be $100,000 (60).
The superintendent does not authorize beginning business
unless it appears on examination that the requisite capital
has been paid in in cash (12 and 68).
Bank directors may declare semiannual or quarterly
dividends out of net profits, which are defined in 28 and
29; but before declaring a dividend a corporation must
carry one-tenth of its net profits to surplus fund.until
the surplus amounts to 20 per cent of the capital (27).
II.—LIABILITIES

AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

It is a constitutional provision that the stockholders
of all corporations "for banking purposes" are individually liable to an amount equal to that of the stock they
hold for all the debts of their corporations (constitution, Art. VIII, sec. 7); bank stockholders are liable to
the extent of the amount of their stock at par, in addition to the amount invested in the shares (71).
There must be not fewer than five directors of every
bank. They must all be citizens of the United States,
and three-fourths of them must be residents of New
York., Each director must own at least $1,000 of the
stock of his bank if the bank is capitalized at $50,000 or
over, and if it is capitalized at less, $500 of its stock (69).
The directors of all corporations, whether banks, savings
banks, or trust companies, must meet once a month.
The}/- must appoint officers to report to them, or to a committee of not fewer than five of them, at each meeting, a
statement of transactions between meetings, this statement to include purchases and sales of securities; dis-




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Banks

counts and loans of $1,000 and over, with items as to collateral; and, where the liability of an individual, firm, or
corporation to the banking corporation has increased
$ 1,000 or more since the last meeting, the name of the
borrower with the collateral furnished by him (42). See
below, under Reports, details of the semiannual reports
and examinations made by directors.
III.—SUPERVISION.

The superintendent of banks of the State, who is chief
officer of the banking department, is appointed by the
governor for terms of three years, and may not be interested in any banking institution; his salary is $7,000 a
year (3). He may appoint three deputies, and clerks,
examiners, etc. (5). The expenses of the department,
including salaries, are prorated among the institutions
subject to it (7, 158, etc.). No examiner may be appointed receiver of a bank he has examined (11). It is
within the superintendent's discretion to determine if it
is expedient and desirable that an application for incorporation as a bank be granted, taking into consideration
fitness of incorporators and needs of the locality (60);
also whether the density of population, convenience, responsibility of incorporators, etc., warrant the establishment of a savings bank as applied for (133 and 134); and
also to settle similar questions in the case of an application
for incorporation as a trust company (183). He passes on
proposed changes of location (31), consolidations (36), and
the advisability of branches (109 and 186). He approves
of reserve depositaries (67 and 198). In case he believes
that the capital stock of any corporation or individual
banker is impaired he orders the deficiency made good in
sixty days, whereupon the directors must assess the
stockholders. If he believes the corporation is violating




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its charter or the law, or is conducting its business unsafely,
he may order the practices discontinued (17).
If capital is impaired, or if the corporation refuses to
submit to examination, violates its charter or the law,
suspends payment, conducts its business unsafely, or if
from an examination or report the superintendent concludes that it is unsafe or inexpedient for the corporation
to continue business, he institutes, through the attorneygeneral, proceedings for a dissolution (18); failure to make
two successive reports is ground for the same action (22).
He then holds possession, through his regular or specially
appointed deputies, till the corporation can resume business or be finally liquidated; the statute provides elaborately for the proceedings, proof of claims, payment of
dividends, etc. (19). When the reserve of a bank, banker,
or trust company falls below the required amount and is
not made good after thirty days' notice, the superintendent proceeds as against an insolvent corporation (67
and 198).
The superintendent posts weekly in his office a detailed
statement giving items of the banking department's work
during the preceding week, including the names of corporations and bankers opening business, names of corporations opening branches, department appointments, resumptions of business, etc. These statements, even after
removed from the superintendent's bulletin, must be
accessible to any applicant (43).
Banks must keep with the department stocks of the
State or of the United States amounting to $1,000, which
are held by the superintendent as a pledge of compliance
with the banking laws (76).
REPORTS.

Banks and individual bankers report to the superintendent at least once in every three months with respect to a




460

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— State

Banks

date designated by the superintendent. The report
includes whatever items the superintendent prescribes, in
every case including the amount of those deposits payment
of which is preferred in insolvency (21). It must be made
within ten days of the designated date (22). Within ten
days after each declaration of a dividend banks report
facts concerning their net earnings, the state of their surplus, etc., to the superintendent (27).
Within thirty days after each regular quarterly report is
made the superintendent publishes a summary in an
Albany newspaper used by him for official notices; the
summary contains specified items of the report, including
capital, deposits, specie, securities held, etc., and such
other items as are necessary to inform the public of the
financial condition of the corporation or banker. The
bank or banker publishes the summary in at least one local
newspaper (24). Examiners report the result of each
examination to the superintendent (11), who may, in his
discretion, cause the report to be published (16).
Directors of all banking institutions receive itemized
reports from an officer, at their monthly meetings, as stated
under II (42). The directors of banks in April and October of every year must examine, or cause a committee of
three of them to examine, the books and affairs of the bank,
with reference particularly to loans and discounts, and the
security given for them, and such other matters .as the
superintendent may prescribe. Within ten days after
completing this examination the directors file a report in
their bank and a duplicate in the banking department.
The report contains a statement of assets and liabilities;
a detailed statement of loans which in the directors' opinion are doubtful or worthless; a statement of loans insufficiently secured, specifying the amount of the loans and the
collateral; a statement of overdrafts; and also a full statement of all matters affecting solvency (23).




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Deposits or other claims of $50 or more unclaimed for
five years must be published for six weeks every year by
the bank or banker with whom the deposit was made (30).
The superintendent submits annually to the legislature
a report showing the condition of the corporations and
bankers reporting to him, with totals summarizing the condition of them all; a statement of those authorized during
the year to begin business, with facts about each; a statement of those who have stopped business during the year;
suggestions for amendments to the banking law; and statistics of the banking department, its expenses, etc. (25).
He must include also details with respect to liquidations,
dividends in insolvent corporations that are unclaimed,
etc. (19).
EXAMINATIONS.
The superintendent, personally or by an examiner, visits
all banks, trust companies, and individual bankers twice
each year. Inquiry is made as to the condition of the corporation, its management, investments, the security given
its creditors, etc., its compliance with law, and such other
matters as the superintendent may prescribe. He may
require examinations more frequently if he thinks them
necessary (8). An examination must be had at once if a
report is not filed on time (22). There is a preliminary
examination to make sure that capital has been paid in
(12). When the superintendent believes capital is
impaired, he may cause a special examination to be made
to ascertain the amount of the deficiency (17). Creditors
of any banking institution and shareholders whose debts
or shares equal $1,000 or over may apply to court for an
examination by a referee (20). See Reports, for the semiannual examination made by directors, the result of
which they report to the superintendent.




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Banks

IV.—RESERVE REQUIREMENTS.

For a bank or banker having principal place of business
in a borough of i ,800,000 or over, the lawful money reserve,
consisting of lawful money of the United States, gold certificates, silver certificates, or notes of national banks,
must equal 25 per cent of the deposits, exclusive of deposits
secured by bonds of New York State; for one with principal
place of business in a borough of a population between
1,000,000 and 1,800,000 the lawful money reserve must
be 20 per cent; for one with principal place of business
elsewhere, 15 per cent. Banks located in boroughs of
1,800,000 or over may deposit on call two-fifths of the reserve in a bank or trust company which has a capital of at
least $200,000, or a capital of $150,000 and a surplus of
$150,000, and is approved by the superintendent as a depositary; banks located in boroughs of less than 1,800,000
and not maintaining a branch in a borough of 1,800,000 or
over may deposit one-half; banks located elsewhere, threefifths. While the reserve is below the requirement, no
new loans or discounts may be made except by discounting
sight exchange, and no dividends may be declared out of
profits (67).
V.—DISCOUNT AND LOAN RESTRICTIONS.

(A) No bank or trust company may loan to any person,
firm, or corporation an amount exceeding one-tenth of its
capital paid in and surplus. This restriction upon the aggregate amount of loans is subject to the following exceptions, however: First, if the bank or trust company has its
principal office in a borough of 1,800,000 or over, it may
loan to any person, firm, or corporation a sum equal to not
more than 25 per cent of its capital paid in and surplus on
security worth at least 15 per cent more than the amount
of the loans; and in smaller boroughs not more than 40 per




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cent on such security. Second, it may loan 10 per cent
of its capital and surplus as first provided, and, beyond
that, if located in a borough of 1,800,000 or over, a further
sum not exceeding 15 per cent of capital and surplus on
security worth at least 15 per cent more than the amount
of the loans, or if located elsewhere 30 per cent upon such
security. Third, purchases of commercial paper drawn in
good faith against actual existing values, and discounts of
paper owned by the person negotiating it may be made, up
to 25 per cent of capital and surplus in the case of a bank
located in a borough of 1,800,000 or over, and in the case of
banks located elsewhere up to 40 per cent. Imposed upon
all these exceptions, however, there is a general proviso
that, with the exception of the liability of the United
States or of New York, or of counties or cities in New
York, the total liability of any one person, firm, or corporation to the bank must never exceed 25 per cent of the
paid-in capital and surplus of the bank if its principal
place of business is located in a borough of 1,800,000 or
over, and must never exceed 40 per cent if it is located
elsewhere.
(B) No bank or trust company may loan on the securities of corporations the payment of which is undertaken
severally but not jointly by two or more individuals, firms,
or corporations, first, if the borrowers or underwriters are
obligated to buy the securities collateral to the loan and
have not paid in cash a sum equal to 25 per cent of the
amount that remains due on the purchase; second, if the
bank or trust company making the loan is liable directly,
indirectly, or contingently for its payment; third, if the
loan is for longer than a year; or, fourth, if the loan exceeds
25 per cent of the capital and surplus of the lender.
(C) No bank, savings bank, or trust company may loan
upon security of real estate on which there is a prior incumbrance, if the aggregate unpaid amount on prior in-




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— State

Banks

cumbrances exceeds 10 per cent of the capital and surplus
of the lender, or if the amount loaned plus the amount
of the prior incumbrances exceeds two-thirds of the appraised value of the real estate. Any real-estate securities
may be taken, however, to secure a loan previously made in
good faith. No bank having its principal place of business in a borough of 1,800,000 or over may loan on real
estate to an amount equal to more than 15 per cent of its
total assets; no bank in a village of not over 1,500 in
which there is no savings bank may loan to an amount
equal to more than 40 per cent of its total assets; no bank
elsewhere to an amount over 25 per cent.
(D) No bank, savings bank, or trust company, nor its
officers, directors, or employees, may purchase commercial paper issued by the bank for less than its face value.
(E) No bank, savings bank, or trust company may
deposit in another moneyed corporation, unless that corporation has been voted a depositary by a majority of
the directors of the depositor corporation, exclusive of
directors who are officers or directors of the depositary.
(F) No officer, employee, or person interested in the
management of a bank, savings bank, or trust company
may as an individual loan upon paper offered to the corporation and refused by it.
(G) No officer, director, or employee of a bank may
borrow of his bank without the consent of a majority of
the directors.
(H) No bank or trust company may accept as security
its own shares, unless it is necessary to prevent loss on a
previous debt; and in that case the stock must be disposed of within six months.
(I) No bank, savings bank, or trust company may loan
on the security of the shares of another moneyed corporation so as to make the lender the holder of more than 10
per cent of the borrower corporation's stock (27).
S- Doc. 353, 61-2




30

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Monetary

Commission

Banks may take interest at 6 per cent, but not more,
except that exchange may be added when paper is taken
which is payable at another place (74); and demand loans
of not less than $5,000 made on warehouse receipts, bills
of lading, stocks, bonds, etc., may draw interest at any
rate agreed upon (75).
VI.—INVESTMENTS.

Banks may own stocks or bonds of the United States
and of the State of New York or any municipality of New
York not in arrears, and may hold real estate for their
necessary accommodation in transacting business, on
mortgage to secure loans, on conveyances to satisfy previous debts, and on purchase under judgments or mortgages held by the bank (66).
No bank or trust company may purchase or hold its
own shares unless it is necessary to do so in order to prevent loss on a previous debt; in such case the corporation
must sell within six months (27).
VII.—OVERDRAFTS .

Overdrafts are apparently allowed for both banks and
trust companies, for they are an item required to be
included in the April and October reports of directors (23).
See also the provision in the Penal Law against overdrafts
by officers, etc.—XI, infra.
VIII.—BRANCHES.

Banks are not allowed to open branches except under
the following restrictions: If the bank is located in a city
of over 1,000,000 and its certificate of incorporation
authorizes it, the bank may open branches in that city for
business with the customers of the branch offices only;
this is subject to the discretionary approval of the super-




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S t a t e

Banks

intendent, who passes upon t h e necessity
of the branch. The capital of t h e bank
a m o u n t normally required b y $100,000
opened under this law and b y $50,000
opened before it was enacted (109).

and convenience
m u s t exceed t h e
for each branch
for each branch

IX.—OCCUPATION

—

OF THE SAME BUILDING.

No savings bank m a y do business or be located in the
same room with any bank or national banking association,
or in a room communicating with any bank or national
banking association (27).
X.—UNAUTHORIZED BANKING.

No person doing a banking business in New York, not
subject t o t h e supervision of t h e superintendent and not
required t o report t o him, m a y use on a sign or on letterheads, etc., a name or other words indicating t h a t the
business is t h a t of a b a n k ; t h e penalty for violation is
$1,000 (112). No bank m a y transact business without
t h e certificate of t h e superintendent (32). No corporation,
without being authorized by law, m a y receive deposits or
m a k e discounts; notes and other securities given t o secure
t h e p a y m e n t of money loaned or discounted contrary to
the" provisions of this section, are void, and every person
and corporation violating it forfeit $1,000 (107). No
foreign corporation except a national bank is allowed to
do deposit and discount business in New York (108).
See also these provisions of t h e Penal Law: Any person, association, or corporation other t h a n a moneyed
corporation, who transacts business under a corporate
name containing the wrords " t r u s t , " " b a n k , " or "savings," etc., is guilty of a misdemeanor (Penal Law, sec.
666). Any person doing banking in New York not
subject t o t h e supervision of t h e superintendent and not




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required by law to report to him, who uses an office sign
having on it a name or other words indicating that the
office is that of a bank, or who uses stationery, etc., having on it a name or other words indicating that the business is that of a bank, is guilty of a misdemeanor (Penal
Law, sec. 302).
XI.—PENALTIES.

If a bank or individual banker delays a report after it
is due, or omits required items, the penalty is $100 per
day until the deficiencies are supplied. Failure to make
two successive reports entails forfeiture of the right to
do business (22). The penalty for failure of the directors
of a bank to file their April and October reports is also
$100 a day paid by the corporation (23). A bank failing to report unclaimed deposits forfeits $100 a day (30).
The penalty on a bank and its officers for maintaining
a branch illegally is $1,000 a week so long as the branch
is open without the superintendent's approval (109).
Section 27, restricting loans (see V), provides for penalties for violations of its restrictions: Any person violating
D forfeits three times the face amount of the paper purchased; any person violating F forfeits twice the amount
of the loan; any person violating G forfeits twice the
amount borrowed; and any person or corporation violating H forfeits twice the nominal amount of the stock.
The penalty for violating the subdivision relative to
declaring dividends and maintaining a surplus is loss of
charter (27).
The following penalties are provided in the Penal Law:
A director of a corporation "having bank powers" who
concurs in a vote of directors by which it is intended
to make a loan or discount to a director or upon paper
upon which a director is liable, to an amount exceeding




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— State

Banks

that allowed by the statute; or a director, trustee, officer,
or employee "of any corporation to which the banking
law is applicable" who maintains or attempts to maintain a deposit of the corporation's funds with another
corporation on condition that the depositary make a
loan to any director, trustee, officer, or employee of the
depositor; or any officer or employee "of any corporation
to which the banking law is applicable" who conceals
from or fails to report to the directors any discounts
or loans or purchases or sales of securities between
meetings of directors; or any director, officer, or employee "of a trust company" who makes any agreement
on issuing a certificate of deposit whereby the holder
may receive payment before maturity, is guilty of a
misdemeanor (Penal Law, sec. 290). Any officer or agent
"of any banking corporation" who makes a guaranty or
indorsement on behalf of a corporation whereby it becomes liable beyond the legal amount is guilty of a misdemeanor (Penal Law, sec. 293). Any officer, director,
or employee "of any bank, banking association, savings
bank, or trust company" who knowingly overdraws his
account and obtains the funds of the institution, or who
asks or receives a consideration for procuring a loan from
or a discount by the institution or for permitting any
person, firm, or corporation to overdraw an account with
the institution, is guilty of a misdemeanor (Penal Law,
294). Any officer, agent, etc., "of any bank, banking
association, or savings bank," and any private banker
who receives any deposit knowing that the bank is insolvent, is guilty of a misdemeanor if the amount of the
deposit is less than $25, and of a felony if the amount
of the deposit is $25 or over. The felony is punishable
by imprisonment for from one to five years, fine of from
$500 to $3,000, or both (Penal Law, sec. 295). Every




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director "of a moneyed corporation" who participates
in a fraudulent insolvency or violates the law is guilty
of a misdemeanor (Penal Law, sec. 297).
SAVINGS BANKS.
I.—TERMS OF INCORPORATION.

Thirteen or more persons, two-thirds of them residents
of the county where the bank is to be located, may become
a savings bank (130), subject to the superintendent's discretion in determining whether the convenience of the district and the responsibility of the incorporators warrant
granting the application (133 and 134). The statute
evidently contemplates associations without capital stock.
The trustees regulate the rate of interest or dividends,
never over 5 per cent, so that the depositors receive the
net profits of the savings bank. When the surplus that
has accrued through the earning of profits over a 5 per
cent dividend amounts to 15 per cent of the deposits,
then the trustees may divide the accumulation equitably
as an extra dividend; such disposal of surplus must be
made at least once every three years (153). The statutes
provide how the per cent of surplus shall be computed
(i54).
Prohibitions on borrowing are given under VI.
II.—LIABILITIES AND DUTIES OF TRUSTEES.

There must be at least thirteen trustees, who must be
residents of New York. No one may be a trustee wTho
allows a judgment against him to remain unpaid for
three months, or takes the benefit of a bankrupt or insolvent law, or makes a general assignment for creditors. A
majority must not belong to the board of directors of any
one bank or national bank (137). The trustee of a savings
bank vacates his position when he becomes trustee, officer,




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Banks

or employee of another savings bank, or borrows from the
funds of his own savings bank, or guarantees money borrowed of his own savings bank, or neglects his duties as
trustee for six months without excuse (140). The trustees
must meet monthly (139); and the provisions of section 42,
concerning meetings of directors and trustees and reports
to them, apply to savings banks. No trustee of a savings
bank is permitted to have any interest in the profits of
the bank, nor to receive payment for his services except
when he is engaged in regular work for the bank; and the
vote of the paid trustee may not be cast to determine his
salary (142 and 155).
If the trustees of a savings bank vote more dividends
than have been earned after deductions for expenses have
been made, they are personally liable to the savings bank
for the excess (153).
III.—SUPERVISION.
The same superintendent, subject to t h e same general
provisions as were enumerated in discussing banks, has
supervision over savings banks. H e proceeds against
savings b a n k s which have violated the law, or which refuse
t o allow an examination of their books, etc., as he does
against banks (17, 18, 19, and 22). H e m a y also proceed
against savings banks which violate t h e spirit of t h e rule
allowing t h e m t o deposit their funds pending good opportunities t o invest (149). H e approves savings b a n k buildings and changes of location, and m a y permit buildings
and lot to exceed 25 per cent of surplus (147). H e must
approve all borrowing b y savings banks and pledges of
their securities (152).
REPORTS.
Savings banks report semiannually, before August 1 and
February 1, to t h e superintendent, their condition on t h e




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.

Commission

mornings of July i and J a n u a r y x, giving items of assets as
follows: the a m o u n t loaned on bond and mortgage; a list
of t h e bonds and mortgages, with t h e location of mortgaged premises not previously reported on; a list of such
previously reported on as have been paid, wholly or in p a r t ,
or foreclosed, with the a m o u n t of p a y m e n t s ; t h e cost, d a t e
of purchase, d a t e of m a t u r i t y , r a t e of interest, par value,
and estimated investment value of all stock or bond investments, designating each particular kind of stock or b o n d ;
t h e a m o u n t loaned on securities, with a statement of t h e
collateral; t h e a m o u n t invested in real estate, giving its
cost; the a m o u n t of cash on h a n d ; t h e amount of cash on
deposit, with w h a t banks, and w h a t amounts in each; and
such other information as t h e superintendent m a y require.
The s t a t u t e provides how investment values are to be computed. Items of liabilities m u s t include t h e a m o u n t due
depositors, including dividends. General items m u s t
include: t h e a m o u n t deposited during t h e previous year
and t h e a m o u n t withdrawn; t h e a m o u n t of interest or
profits earned and t h e a m o u n t of dividends credited to
depositors; t h e number of accounts opened or reopened;
t h e number closed; t h e number open at t h e end of t h e
year; and such other information as t h e superintendent
m a y require (21). The regular semiannual reports m u s t
be published in a local newspaper (24). A savings b a n k
m a y not receive deposits until it has sent t h e superintendent t h e names and addresses of its officers (135).
The trustees receive monthly a report from a designated
officer, as before stated (42). Proceedings of t h e trustees
in voluntary dissolutions m u s t be reported to t h e superintendent (162 and 163).
Savings banks annually report to t h e superintendent
concerning accounts of $5 or more t h a t have been d o r m a n t
(i. e., neither increased nor diminished, nor pass book pre-




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— Savings

Banks

sented for credit of interest) for twenty-two years and
over; t h e report must give specific facts, including dates,
n a m e of depositor, and nationality of depositor, b u t not
a m o u n t to t h e credit of the account. The superintendent receives claims for these d o r m a n t deposits (30).
When, after dissolution of a savings bank, unclaimed deposits are left with t h e superintendent, he must include a
statement of t h e m in his annual report t o the legislature
(164); see Banks for other items in t h e report.
The summary published b y the superintendent after he
receives a quarterly b a n k report is not published in t h e
case of t h e semiannual reports of savings banks (24).
After each examination t h e examiner reports t h e result of
the examination to t h e superintendent (11), who m a y cause
the report to be published if he deems it proper (16).
EXAMINATIONS.

The superintendent, personally or by an examiner,
visits savings banks once in two years, or more frequently
if he thinks it necessary. The examination covers t h e
same matters as in the case of banks, and the examiner is
subject to t h e same limitations (8, 11, 12, 16, 20, and 22);
see Banks.
The trustees, b y a committee of not less t h a n three of
their number, m u s t twice a year thoroughly examine t h e
books of t h e savings bank. The statements of assets and
liabilities forwarded to the superintendent for July 1 and
J a n u a r y 1 is based on this examination (157).
IV.—RESERVE

REQUIREMENTS.

Certain provisions with respect to cash allowed to be
held b y a savings b a n k without investment are given in
the last paragraph under VI, infra. They are not requirements, however.




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V . — D E P O S I T , D I S C O U N T , AND L O A N R E S T R I C T I O N S .

Savings banks m a y limit t h e amount which one person
or society m a y deposit. In any case t h e deposit of one
individual, exclusive of deposits arising from judicial sales
or t r u s t funds or interest, must not exceed $3,000, nor t h e
deposit of one society, exclusive of accrued interest,
$5,000 (143).
Of the restrictions given under Banks, V, prescribed b y
section 27, savings banks are subject to those against
loans on security of real estate, in paragraph C (see V,
B a n k s ) ; to t h e prohibition of purchase b y t h e corporation or its officers, etc., of paper issued b y t h e corporation
for less t h a n its face value, paragraph D ; t o t h e rule for
t h e designation of depositaries, paragraph K; to t h e provision t h a t officers may not loan upon paper offered t o t h e
corporation and refused by it, paragraph F ; and t o t h e
prohibition against loaning on t h e security of shares of
another moneyed corporation to such an extent as to m a k e
t h e lender holder of more t h a n 10 per cent of t h e borrower's stock, paragraph I (27).
Savings banks must not loan to their trustees (140 and
142); they must not loan on personal securities (150);
t h e y m u s t n o t issue certificates of deposit payable on dem a n d or on a fixed day, nor pay interest, except their
regular dividends (152).
See also VI, below.
VI.—INVESTMENTS.

Savings banks are not permitted to deal in land or personalty or commercial paper, nor t o borrow pledging securities except with the approval of t h e superintendent a n d
b y vote of a majority of t h e trustees (152). They m a y
hold real estate only for necessary buildings, subject t o t h e
superintendent's approval; and unless he approves, t h e
lot and buildings, though p a r t m a y be rented, m u s t n o t




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— Savings

Banks

cost more than 25 per cent of the surplus. Savings banks
may purchase at foreclosure sales on mortgages owned by
them, may purchase at sales on judgments rendered for
debts due them, or in settlements to secure such debts,
but the land so acquired must be sold within five years
(i47)The provisions for investments for savings banks are
minute and complex. Omitting minor distinctions, they
may invest, first, in stocks and bonds of the United
States; second, in stocks and bonds of New York State;
third, in stocks or bonds of any State which has within
ten years before the investment not defaulted in payment
of any debt; fourth, in the stocks or bonds of any city,
town, etc., of New York; fifth, in stocks or bonds of any
city in a State admitted to statehood prior to 1896, which
city since 1861 has not repudiated payment of any debt,
provided the city has a population of not less than 45,000,
was incorporated twenty-five years before the investment, has not since 1878 defaulted for more than ninety
days on its debts, nor compromised them, and is not at
the time of the investment indebted beyond 7 per cent of
its valuation for taxes, including the debts of municipal
corporations or subdivisions, except counties, that are
included wholly or partly within the limits of the city, but
deducting water debt and sinking fund; sixth, in bonds
and mortgages on unincumbered real property in New
York to the extent of 60 per cent of its value, but not more
than 65 per cent of the whole amount of deposits of the
savings bank may be thus invested; if the real property
is unimproved, the mortgage must not be for more than
40 per cent of the value of the land, and mortgages
must always be approved by a committee of trustees.
Further investments permitted are as follows: (a) First
mortgage bonds of a railroad corporation of New York,
the principal part of whose railroad is located in New




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etary

Commission

York, or first mortgage bonds of any railroad corporation
of any State, controlled and operated as part of the system
of such a New York railroad if a majority of the stock of
the controlled railroad is owned by such a New York railroad, or in the refunding bonds of any railroad companies
satisfying the above description; the companies issuing
the bonds must have paid interest on their mortgage debt
and 4 per cent dividends for five years, and the capital of
the issuing corporation must equal one-third of its total
mortgage debt, (b) Mortgage bonds of fourteen named
railroads; also the mortgage bonds of railroads leased,
operated, or controlled by one of the named companies, if
the controlling corporation guarantees the bonds, and if
the company issuing the bonds has earned 4 per cent
dividends for ten years, and its stock equals one-third of
its bonded debt; these bonds must be secured by first or
refunding mortgage, (c) Mortgage bonds of two named
railroads so long as they pay 4 per cent dividends, provided their capital stock equals one-third their bonded
debt; these bonds must be secured by first or refunding
mortgage, (d) First mortgage or refunding bonds of one
named railroad, provided its capital equals one-third its
bonded debt, and provided the railroad is of standard
gauge. Also refunding bonds of another named railroad.
(e) Mortgage bonds of any railroad incorporated in one
of the United States which owns 500 miles of standard
gauge railroad, exclusive of sidings, in the United States,
provided that for five years it has paid principal and interest of its mortgage debt and 4 per cent dividends, and
provided that for five years its gross earnings, including
the earnings of subsidiary companies, have been at least
five times the amount necessary to pay interest on outstanding debts and rentals, and provided the bonds are
secured by first or refunding mortgage covering 75 per




476

New

York

— Savings

Banks

cent of the railroad's line; these mortgages must not authorize an issue of bonds which, together with outstanding
prior debts, exceeds three times capital stock. (/) Any
railroad mortgage bonds which would be a legal investment under (e) except for the fact that the railroad issuing the bonds owns less than 500 miles of line, provided
that during the previous five years its gross earnings, including those of subsidiary lines, have been at least
$10,000,000. (g) Mortgage bonds of a railroad corporation described in (e) or (/), or mortgage bonds of a railroad
owned by such a corporation, assumed or guaranteed by
it, provided the bonds are prior to or are to be refunded
by a general mortgage of the corporation, the bonds
secured by which are a legal investment under (e) or (/),
and provided further the general mortgage covers all the
real property upon which the mortgage securing the
underlying bonds is a lien, (h) Any railroad mortgage
bonds which would be a legal investment under (e) or (g),
except for the fact that the railroad issuing the bonds
owns less than 500 miles of road, provided the bonds are
guaranteed or assumed by a corporation whose first or
refunding mortgage bonds are a legal investment under
(e) or (/); but no bonds thus guaranteed or assumed are a
legal investment if the mortgage securing them authorizes
a total issue of bonds which, with prior debts of the guaranteeing or assuming corporation, exceeds three times its
capital, (i) First mortgage bonds of a railroad whose
entire capital is owned by and which is operated by a
railroad whose last issued refunding bonds are a legal
investment under (a), (e), or (/), provided these bonds are
guaranteed by the owning and operating company, and
provided the mortgage securing them does not authorize
an issue of more than $20,000 of bonds per mile; but no
bonds thus guaranteed shall be a legal investment if the




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Monetary

Commission

mortgage securing them authorizes a total issue of bonds
which, together with prior debts of the guaranteeing company, exceeds three times its capital stock.
Bonds which have been a legal investment are not
rendered illegal by the sale of the mortgaged property or
by the consolidation of the issuing or assuming railroad
with another railroad, provided the consolidated or purchasing railroad assumes the bonds and continues to pay
interest or dividends, or both, on the securities issued to
acquire the stock of the company taken over or the property purchased to an amount equal to 4 per cent of the
capital stock outstanding at the time of the consolidation
or purchase of the issuing or assuming corporation.
Not more than 25 per cent of the assets of a savings
bank may be loaned or invested in railroad bonds; not
more than 10 per cent of its assets may be invested in the
bonds of any one railroad described under (a); and not
more than 5 per cent of its assets in the bonds of any other
railroad (146).
A fund not exceeding 10 per cent of all the deposits may
be held by a savings bank in cash on hand or on deposit
for current expenses, but the deposit in any one depositary
must not exceed 25 per cent of the capital and surplus
of the depositary. This fund may be loaned on pledge of
certain of the securities in which a savings bank may
invest. The loan, however, must never exceed 90 per
cent of the cash value of the securities pledged (148).
This depositing is also subject to the rule that the depositary must be voted one by a majority of the directors of
the depositor, exclusive of those who are officers of the
depositary (27). Savings banks may deposit temporarily the excess of current daily receipts over payments
pending a chance to invest (149).




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Banks

VIII.—BRANCHES.

There is no express provision respecting branches of
savings banks. The provision given under Banks reads:
"No bank," etc. (109). The certificate of incorporation
of a savings bank must state "the place where its business is to be transacted, designating the particular city,
village, or town, and, if in a city, the ward therein " (130).
IX.—OCCUPATION OF THE SAME BUILDING.

(See Banks, IX.)
X.—UNAUTHORIZED BANKING.

No person, firm, or corporation may use ' 'savings " in
its business or in advertising, or do a savings deposit
business, except savings banks organized under the New
York statutes; offenders forfeit $100 per day. Despite
the prohibition on unauthorized savings banking, however, principals of public schools may collect savings
from their pupils and deposit them, using in their circulars such words as "school savings banks" (160). No
savings bank may transact business without the certificate of the superintendent (32). See also sections of the
Penal Law, under Banks, X.
XI.—PENALTIES.

Failure to report on time entails, as in the case of banks,
forfeit of $100 per day; failure to make two successive
reports entails forfeiture of charter (22). Savings banks
which fail to report unclaimed deposits, etc., forfeit $100
a day during the delay (30).
A savings bank which allows a majority of its trustees
to be members of the board of directors of a bank or
a national bank forfeits its charter (137). Any person




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Commission

violating t h e prohibition upon purchase by a savings b a n k
or its officers, etc., of commercial paper issued by the
b a n k at less t h a n its face value forfeits three times t h e
face value of t h e paper; any person violating the prohibition upon a loan b y an officer, etc., on paper which
t h e savings b a n k has refused forfeits twice t h e a m o u n t of
t h e loan (27).
T h e provisions of t h e Penal Code discussed under t h e
head of Banks are in p a r t also applicable t o savings banks
See also Penal Law, section 296, which makes it a misdemeanor for any officer or trustee of a savings b a n k to
invest its funds in unauthorized securities.
T R U S T COMPANIES.
I.—TERMS

OF INCORPORATION.

T h e capital of a t r u s t company m u s t be at least $500,000,
except t h a t in cities of less t h a n 250,000 and more t h a n
100,000 t h e capital m a y be not less t h a n $200,000; in
cities between 25,000 and 100,000 it m a y be not less t h a n
$150,000; and in cities under 25,000 it m a y be not less
t h a n $100,000 (180); this capital must be fully paid in in
cash (184).
The superintendent must be assured t h a t all the capital
has been paid in in cash (12); he has discretion to determine if the public convenience requires this incorporation (183).
The provisions for calculating profits before declaring
dividends and for charging losses as reduction of capital
are as they were in the case of banks (28 and 29).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

A constitutional provision, before stated, makes t h e
stockholders of all corporations "for banking p u r p o s e s "




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Trust

Companies

individually liable if default is made in the payment of any
debt, for all the debts of the corporation, to the amount
of the stock held at the time of the default (constitution,
Art. VIII, sec. 7). It is provided in the banking law that
stockholders in a trust company are individually responsible for its debts existing at the time it makes default on
a debt, "but no stockholder shall be liable for the debts
of the corporation to an amount exceeding the par value
of the respective shares of stock by him held in such corporation at the time of such default" (196).
Directors, of whom there must be for each trust company between thirteen and thirty, must each hold ten
shares of the stock of the company (195). They must
meet once a month and must appoint officers to report
to them or a committee of them the statement of which
details were given under this head in Banks (42). See
Banks, also, for their semiannual examination and report (23).
III.—SUPERVISION.

The general sections of the banking law dealing with
the superintendent and his examiners give him authority
over trust companies. It is within his discretion to bar
incorporation when public convenience will not be furthered by the proposed trust company (183). He approves reserve depositaries, requires deficient reserves to
be made good, and proceeds against trust companies
which fail to make good their reserves in thirty days as
against insolvent corporations (198). See Banks III, for
his proceedings against delinquent corporations (17, 18,
19, and 22), and for other powers. He authorizes branches
when he has ascertained that public convenience will be
promoted by them (186).
It is provided that every corporation subject to the
banking law "except banks, savings banks, and domestic
S. Doc. 353, 61-2




31

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Monetary

Commission

corporations specified in articles six and eight of this chapter, engaged in receiving deposits of money in t r u s t in this
State, and required t o make a report of its affairs t o t h e
superintendent of banks " (six and eight are articles dealing with cooperative savings and loan associations- and
mortgage, loan, and investment companies) must deposit
with t h e superintendent securities of various sorts and in
various amounts, t o be held by t h e superintendent in
t r u s t for depositors and creditors, paying t h e interest t o
t h e corporation (14).
REPORTS.
T h e reports of trust companies are provided for in t h e
same terms as are those of b a n k s ; they must be m a d e once
in every three months in respect to a date designated b y
t h e superintendent, within ten days after t h a t day, and
m u s t be published in a local newspaper; t h e superintendent
publishes his summary, as in the case of banks (21, 22, and
24). A designated officer reports monthly to the directors
(42). After each examination, t h e examiner reports its
result to the superintendent ( n ) , who m a y publish t h e
report if he wishes (16). See Banks, for superintendent's
annual report to the legislature and for directors' semiannual report. The report of unclaimed deposits a n d
t h e report of net earnings and surplus after t h e declaration of each dividend, are required only of ' ' b a n k s " (27
and 30). Before beginning business a trust company m u s t
file with the superintendent a list of its stockholders, with
address and stock holdings of each (185).
EXAMINATIONS.
Here also t r u s t companies are subject t o t h e same provisions as banks are; they are examined twice a year on
matters previously enumerated (8, 11, 12, 16, 17, 20, 22,




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Trust

Companies

and 23); see Banks. Trust company directors m a k e April
and October examinations, such as are required of bank
directors (23). There is a preliminary examination b y t h e
banking department to make sure capital has been paid
in (184).
IV.—RESERVE

REQUIREMENTS.

First,—A trust company having a principal place of
business or a branch in a borough which has a population
of 1,800,000 or over must have a reserve fund of at least 15
per cent of its deposits, exclusive of moneys held in t r u s t
not payable within thirty days, exclusive also of time
deposits not payable within t h i r t y days represented b y certificates, and exclusive also of deposits secured by bonds of
New York State. This reserve must consist of either lawful money of the United States, gold certificates, silver
certificates, or national-bank notes.
Second.—A trust company having its principal place of
business in a borough which has a population of less t h a n
1,800,000 (provided t h e trust company has no branch in
a borough of over 1,800,000) must have a reserve of 15 per
cent of t h e aggregate deposits, exclusive of t h e same
deposits t h a t were enumerated above. Only two-thirds of
this reserve, however, m u s t consist in the funds prescribed
for t h e t r u s t companies in the larger boroughs; t h e other
one-third m a y be in t h e shape of deposits subject t o call in
a bank or t r u s t company in the State, with a capital of at
least $200,000, or with a capital and surplus of at least
$300,000; the depositary must be approved by the superintendent of banks.
Third.—A trust company having a principal place of
business elsewhere must hold a reserve equal to a t least
10 per cent of its deposits, exclusive of the sorts enumerated in t h e first paragraph above. Half of this reserve
must be in t h e lawful money prescribed in the other cases,




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Commission

and the other half may be on deposit in a bank or trust
company in the State approved by the superintendent
of banks, with capital of $200,000 or capital and surplus of
$300,000. If the reserve falls below, the company must
make no new loans except by purchase of sight exchange,
nor pay dividends till the reserve is restored (198).
V.—DISCOUNT AND LOAN RESTRICTIONS.

Trust companies are subject to most of the provisions
of section 27. The restrictions upon loans to any one
person, firm, or corporation are as stated in paragraph A
under this head under Banks; the restrictions upon loans
made on securities of corporations where payment is
undertaken severally, but not jointly, by two or more
individuals, firms, or corporations are as stated in paragraph B; the restrictions upon loans upon the security
of real estate are as stated under C. The prohibition
upon purchase by a trust company or any director, etc.,
of paper issued by the corporation for less than its face
value is as stated in paragraph D. The requirements
in choosing depositaries are as stated in E. No officer
etc., may, as an individual, loan upon paper which the
corporation has refused, as stated in F. The prohibition
on holding the corporation's own shares either as security
or by purchase is as stated in H. The prohibition against
loaning so as to hold more than 10 per cent of a borrowing monied corporation's stock is as stated in I. Note
that G applies to ''any bank," and therefore not to trust
companies (27).
No trust company may loan an amount equal to more
than one-tenth of its capital stock to any director or
officer, and no loan may be made to any director or officer
without the consent of a majority of the directors (186).




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Companies

VI.—INVESTMENTS.

Trust companies m a y hold real property t h a t is necessary for their business or t h a t is acquired in satisfaction
of debts under sales, judgments, or mortgages, or in
settlements (186).
Trust companies must invest their capital in bonds and
mortgages on unincumbered real property in New York
not exceeding 60 per cent of t h e value of t h e property,
or in stocks or bonds of New York State, of t h e United
States, or of municipalities of New York. Trust funds
m a y be invested as capital is, or in securities of any
State, " o r in such real or personal securities as it (the
company) m a y deem proper'' (193). A t r u s t company m a y
not hold stock in any private corporation to an amount
exceeding 10 per cent of the capital, surplus, and undivided profits of the corporation holding, nor m a y a trust
company hold stock of another monied corporation exceeding 10 per cent of the total stock of the corporation
whose stock is held, except in the case of an adjacent
safe deposit company (194).
See Banks for the prohibition upon a trust company's
holding its own stock (27).
VII.—OVERDRAFTS.

(See this heading under Banks.)
VIII.—BRANCHES.

Trust companies are prohibited from doing business*
by branch offices in a city not named in the certificate
of incorporation as the place of the company's business;
written approval of the superintendent, which he m a y
give or withhold a t his discretion, is a prerequisite to
opening a branch; the capital of t h e company m u s t
exceed t h a t normally required by $100,000 for each
branch (186).




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IX.—OCCUPATION OF THE SAME BUILDING.

See Banks, I X .
X . — U N A U T H O R I Z E D T R U S T COMPANY B U S I N E S S .

Foreign corporations are denied most trust company
powers (186). No trust company m a y transact business
without t h e certificate of t h e superintendent (32). See
also sections of t h e Penal Law, under Banks, X .
XI.—PENALTIES.

The penalties are in general the same as those for
violation of law b y banks. Failure to report entails a
forfeit of $100 per day. Failure to make two successive
reports entails forfeiture of charter (22). Failure of
directors to file their April and October reports entails
a $100 a day penalty, paid b y the corporation (23).
There is a $1,000 a week penalty for maintaining an
illegal branch (186). See Banks, X I , for the penalties
for violating various provisions of section 27; all are
applicable to trust companies except G, which applies t o
" a n y b a n k , " and-except the penalty of loss of charter
for violating provisions dealing with dividends and surplus. This latter provision puts certain requirements
on " a n y b a n k " with respect to declaring dividends, after
which it requires ''each corporation" to make a report
on dividends, net earnings, etc.
The various misdemeanors specified in t h e Penal Law
(see Banks, X I ) apply, m a n y of them, to trust companies,
including especially the agreement b y an employee of a
trust company with a depositor t h a t the depositor's certificates be paid before m a t u r i t y (Penal Law, sec. 290).
Directors who open a branch without the written approval of the superintendent forfeit $1,000 per week (186).




486

NORTH CAROLINA.
" Banks " is the title of chapter 7 of the Revisal of 1905
of the laws of North Carolina. This act as originally
passed applied to commercial banks and savings banks.
Chapter 829 of the public laws of North Carolina for 1907
was designed, according to its title, to amend chapter 7
by placing trust companies under the laws and rules
governing banks. This was done by inserting at various
places in chapter 7 additions extending it to "banking
and trust, fiduciary, and surety companies." The result
seems to be that chapter 7 now applies indiscriminately
to banks, savings banks, and trust companies that also
do a banking business; the digest is accordingly not
divided under those three heads. Nevertheless, since
the amendment in certain sections left the language of the
original chapter in such condition that it by no means
clearly applies to all classes, such instances are indicated
in the digest by quoting the doubtful language of the
statute as it now stands. There are, besides, a few
sections which are framed to apply only to one class,
and these also are indicated. The citations are to sections
in the Revisal of 1905 as amended by chapter 829 of 1907.
The statutes have been examined through the special
session of 1908 (at which an act was passed protecting
banks which issued scrip in the panic of 1907 and 1908
from the penalties upon the issue of paper to circulate as
money—1908, chap. 121), and the regular session of 1909.




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I . — T E R M S OF INCORPORATION.

T h e capital stock of a bank, savings bank, or banking,
trust, a n d surety company must be not less t h a n $5,000
in cities and towns of 1,500 or less; not less t h a n
$10,000 in cities and towns of from 1,500 to 5,000; a n d
not less t h a n $25,000 elsewhere. The shares m u s t be
of $50 or $100 (222). Before beginning banking, or
banking and trust or surety business, every company
files with t h e corporation commission a statement containing various items. Nothing m a y be received in paym e n t of capital stock b u t money (225). Fifty per cent of
t h e capital stock of every b a n k m u s t be paid in in cash
before business is begun, and t h e rest paid in in monthly
installments of a t least 10 per cent of t h e whole capital,
in cash; no b a n k m a y begin business with less paid-in
capital t h a n $5,000. This provision applies in its terms
as stated only t o " e v e r y b a n k " (224, amd. b y 1909, chap.
911). I t seems likely t h a t in case of ambiguity t h e statu t e would be read t o apply t o all three sorts of companies,
on t h e strength of t h e legislature's manifest intention t o
m a k e t h e rules uniform for t h e m all.
T h e corporation commission m a y withhold from any
bank, banking, and trust, fiduciary or surety company t h e
authorizing certificate if it has reason to believe t h a t t h e
organization is formed for objects other t h a n those contemplated by t h e s t a t u t e (227).
Corporations m a y combine t h e business of discount and
deposit banking known as commercial banking, and t h e
business of operating offices of loan and deposit known as
vSavings banking (222).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS AND

DIRECTORS.

The stockholders of " every b a n k organized under t h e
laws of North Carolina" are individually responsible for




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Carolina — General

Provisions

all contracts and debts of the corporation to the extent
of the amount of their stock at par in addition to the
amount invested in the shares. Here also, although the
general intent of the act of 1907 seems to have been to
bring trust companies within the scope of chapter 7, the
language of the original section has been unchanged and
is as quoted (235).
III.—SUPERVISION.

The supervision of banking institutions in this State
is in the hands of the corporation commission, a court
of record consisting of three commissioners elected like
other state officers and holding office for six years. They
have control over not banks alone, but also railroads,
telegraph companies, etc. (241, and Revisal of 1905, chap.
20). The corporation commission may make such rules
for the governing of banking institutions as in its judgment
seem wise (240).
The corporation commisssion appoints a suitable person
or persons to make examinations of individuals and
corporations doing a banking business (246). These
examiners when ordered by the commission have authority
to take possession of "any bank doing business under
the laws of this State," and retain possession until a
thorough examination can be made, when, if the examiner
finds that "such bank" is insolvent or conducting its
business unsafely, then the examiner, if authorized by
the corporation commission, may hold possession of all
the property of "such bank, corporation, partnership,
firm, or individual" until the commission acts on the
examiner's report and has a receiver appointed. The
commission has power to institute proceedings for receivership or for such other relief as is necessary to protect the creditors. The commissioners may grant sixty
days in which to correct irregularities, or make good




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Commission

deficiencies (250). When a receiver has been appointed he
is under the control of the commission in so far as their
orders do not conflict with the decrees of the appointing
court (1907, chap. 829, sec. 13). If the reports or examinations of persons, firms, or corporations doing a banking,
trust, and surety business show that their liabilities are
equal to their capital stock the corporation commission
has power to make rules for the reduction of their liabilities (242a). The commission has certain authority
over reorganizations (230). Bank examiners have authority to arrest for violation of the criminal laws of the
State relating to banking (251).
REPORTS.

Corporations, firms, and individuals "transacting a
banking business or banking and trust, fiduciary, and
surety business or banking and real estate business''
make not less than four reports a year to the corporation commission in the form prescribed by the commission.
The report is published in a local newspaper (242).
Certain reports are required from state depositaries
(5371) and from all banking institutions for purposes of
taxation (5267 et seq.). In the case of persons, firms,
or corporations "doing a banking and trust and fiduciary
and surety or guarantee business," the reports show the
trust and surety business as part of the liabilities of the
banking institution (242a). Special reports may be called
for by the commission whenever necessary from "any
bank, corporation, firm, or individual transacting a
banking business" (243). Once a year, or whenever
called upon, "every bank" must file with the corporation
commission a list of its stockholders, with the number
of shares held by each (244).




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Carolina—General

Provisions

EXAMINATIONS.

If examinations are necessary they m a y be made, preliminary to granting the authorization to begin business
(226). The examiner or examiners appointed by t h e
corporation commission examine " e v e r y bank, corporation, or individual doing a banking business" as often as
m a y be deemed necessary, and a t least once a year (246).
After examining any corporation or individual doing a
banking business the examiners within ten days make a
detailed report to the commission (248). An examiner
when ordered by t h e commission m a y take possession of
" a n y b a n k doing business under t h e laws of this S t a t e "
and retain possession for time enough to m a k e a thorough
examination. If this discloses unauthorized transactions
or the like, t h e examiner, if authorized by t h e commission
holds t h e property pending proceedings for a receiver
(250).
IV.—RESERVE

REQUIREMENTS.

" Every bank or banking and trust company doing business and engaging in a banking, trust, fiduciary, or surety
business and dealing in real estate " m u s t keep in available
funds a reserve equal to 15 per cent of its deposits. Twofifths of t h e 15 per cent m u s t be in cash in the vaults of the
bank. Savings banks are required to keep a reserve in
available funds equal to 5 per cent of their deposits (231).
Available funds generally m u s t consist of cash on h a n d
and balances due from solvent banks. Cash m a y include
lawful money of the United States and exchange for any
clearing house association. If available funds fall below
t h e reserve requirement, no new loans m a y be m a d e except
b y discounting or purchasing sight bills of exchange, a n d
no dividends m a y be declared (232).




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V.—DISCOUNT AND LOAN RESTRICTIONS.

The total liabilities to any "banking institution or
banking or trust company doing a fiduciary and surety
business and dealing in real estate" of any person, company, or firm for money borrowed including in company or
firm liabilities, liabilities of the members, must never
exceed one-tenth of the paid-in capital of the bank. The
discount of bills of exchange drawn against existing values,
and generally the discount of commercial paper, are not
considered money borrowed. This section, however, does
not apply "to banks" with a paid-up capital of $100,000
or less (233).
"No bank" may hold as pledgee any portion of its own
capital vStock (229).
VI.—INVESTMENTS.

"Banking corporations, banking and trust companies
doing a fiduciary and surety business" may hold real
estate, if it is necessary for the convenient transaction of
their business, including other apartments that may be
rented (this investment not to exceed 25 per cent of capital
and surplus, however); if the real estate is mortgaged to
secure loans due the bank; if it is conveyed to it in satisfaction of previous debts; or if it is acquired by sale under
execution or judgment in favor of the purchasing bank
(228). "Such bank and trust company doing a general
banking and trust, fiduciary and surety business and dealing in real estate" must not invest more than 25 per cent
of its capital and surplus in real estate, unless to protect
loans or debts previously contracted, or unless acquired
on sale under execution in its favor (228a).
" No bank " may purchase its own stock unless the purchase is necessary to prevent loss on a previous debt (229).




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Carolina — General

Provisions

XL—PENALTIES.

The penalty for failing to report or publish required
statements is $200 (245). Any person who willfully makes
a false statement in the books of any banking institution
or exhibits false papers to deceive an examiner or publishes
a false report is guilty of a felony punishable by imprisonment of from four months to ten years (3326). Officers
and directors of banks, who without authority from the
directors issue certificates of deposit, draw negotiable
paper, assign assets, make fraudulent report or statements or aid in doing these things are guilty of a felony.
The same section provides in a common form for embezzlement (3325).
If any bank examiner makes a false report of the condition of an examined bank with intent to abet the operation
of an insolvent bank or if the examiner accepts a bribe to
induce him not to report an examination, or if he neglects
to examine by reason of having taken a bribe, he is guilty
of a felony, punishable by imprisonment of from four
months to ten years (3324).




493

NORTH DAKOTA.
The digest for this State is based on the Revised Codes,
1905,and the session laws of 1907 and 1909. The principal act is one passed in 1905, the language of which refers
continually to "such association," an expression which
goes back to " any association organized under the provisions of this chapter," and in some instances to "every
banking association, savings bank, and trust company organized under this chapter." It seems likely, therefore,
that the chapter is meant to apply to all three sorts of institutions. It has been digested under " Banks " only, and
a hint is given under " Savings Banks " of the various provisions of the chapter which expressly mention savings
banks. Except for the sections in this act which mention savings banks and one or two other provisions of
the codes, savings banks are not subject to particular
laws; so it is readily believed that they are subject to
the banking law. If it is true that trust companies are,
too, they are legislated for also, nevertheless, among the
provisions relating to corporations, under the chapter
"Organization and management of annuity, safe deposit, and trust companies.' Provisions of this chapter
are digested under the heading "Trust Companies;" but
the probable application of the bank chapter to trust companies must be also borne in mind. Numbers in parentheses refer to sections in the Revised Codes of 1905.




494

North

Dakota

— State

Banks

BANKS.
I . — T E R M S O F INCORPORATION.

No association m a y be organized under the banking
chapter in cities, towns, or villages of i ,000 or less with a
capital of less t h a n $10,000; in those of 1,000 t o 2,000,
with less t h a n $20,000; in those of 2,000 to 3,000, with
less t h a n $30,000; in those of 3,000 to 4,000, with less t h a n
$35,000; in those of 4,000 t o 5,000, with less t h a n $40,000;
in those of over 5,000, with less t h a n $50,000. At least
50 per cent of t h e capital m u s t be paid in before business
is begun, and t h e balance m u s t be paid in in installments
of not less t h a n 10 per cent of t h e capital at t h e end of
each m o n t h (4641). Shares are of $100 each (4645).
Dividends m a y be declared semiannually or annually
out of net profits (never from capital; nor m a y capital be
otherwise impaired—4650); b u t before t h e declaration,
one-tenth of net profits m u s t be carried to surplus until
it amounts to 20 per cent of capital (4648).
" E v e r y banking association in this S t a t e " is exempt
from a t t a c h m e n t and execution (4673).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS AND

DIRECTORS.

The shareholders of every association organized under
t h e banking chapter are individually liable for debts of
t h e association to t h e extent of t h e a m o u n t of their stock,
in addition to t h e a m o u n t invested in the shares. This
liability continues for one year after transfer of stock
(4653).
Every director m u s t own a t least 10 shares of stock
(4649). Two-thirds of t h e directors must be residents of
N o r t h D a k o t a (4639). In J a n u a r y and July of each year
the directors examine t h e affairs of the bank, reporting




495

National

Mon

etary

Commission

to the state banking board (4667). Any bank officer
or employee who pays out funds on a check for which
there is not the required sum on deposit is personally
liable to the bank for the amount paid (4669). Although
banks which are disposing of loans on real estate may not
guarantee the payment of the loan, the person or officer
who illegally attempts to bind the bank by such guaranty
is liable under it (4639).
III.—SUPERVISION.

There is a state banking board composed of the governor,
the secretary of state, and the attorney-general. This
board holds monthly meetings, and special meetings at
the call of the governor. It controls banks, savings
banks, and trust companies. At its regular meetings it
examines all reports, and reports of examinations turned
in by the state examiner (4635). The state examiner,
an official who inspects public accounts, etc., is ex officio
superintendent of banks. He does the examining and
reports to the state banking board. He must not be
interested in any association organized under the banking
chapter (4664). His term of office is two years (140).
Every bank is given an official number by the secretary
of state (1909, chap. 43).
The secretary of state withholds permission to begin
business if he has reason to believe the corporation is not
organized for legitimate purposes (4639). Reductions
and increases in capital must be approved by the state
banking board (4646). The board must determine what
are bad debts, and must make and enforce orders for the
disposal of them (4650). The board approves of reserve
depositaries. The board must notify a bank whose
reserve is below the required amount, and if it fails after
thirty days to repair the reserve, the board imposes a




496

North

Dakota

—

State

Banks

penalty (4655). The secretary of state may withhold a
certificate from a corporation which he has reason to
suppose is formed for other than legitimate objects (4639).
On being satisfied of the insolvency of any banking
association organized under the banking chapter, or of the
violation of any of the provisions of the chapter, the
board, after an examination, takes charge of the insolvent
bank, pending action by a court. The board appoints a
temporary receiver (4668). If it appears that the capital
stock of a bank is impaired, the board must make an
order restraining the declaring of dividends and require
the deficit to be made good (4671). If any bank fails to
pay a judgment against it, the board declares the bank
insolvent and causes a receiver to be appointed (4673).
Insolvency is defined to include failure to make good a
deficiency in reserve, and noncompliance with an order
of the board (4674). If any bank fails to comply with a
requirement of the board or of the examiner for ninety
days, or for a shorter period if it is specified in the order,
it is deemed to have forfeited its franchise, and the state
banking board, through the attorney-general, must bring
suit to annul the bank's existence (4663).
REPORTS.

" Every banking association, savings bank, and trust
company organized under this chapter" must make at
least five reports a year to the state examiner, in a form
prescribed by the banking board, as nearly as possible like
the form for national bank reports. The report shows
resources and liabilities at the close of business on a
past day specified by the examiner, which must, whenever
possible, be the day on which national banks report.
Reports must be transmitted within seven days after
receipt of the examiner's request, and an abstract must
S. Doc. 353, 61-2




32

497

National

Monetary

Commission

be published in a local newspaper. The board m a y call
for a special report whenever it is necessary (4652).
After the examination made b y the directors in J a n u a r y
and July of each year they report t h e results t o t h e state
banking board with suggestions and criticisms (4667).
The state examiner reports t h e result of every examination to t h e banking board (4664). The temporary receiver appointed b y the state banking board reports as
soon as he has taken charge of a bank (4668). A list of
names of shareholders with a m o u n t of stock held b y each
is filed twice a year with t h e state examiner (4670). For
reports required for taxation see 1508 and 1509; for reports from depositaries of public funds see 931.
EXAMINATIONS.

The state examiner, as often as the state banking board
sees fit and a t least once a year, examines "every banking
association, savings bank, and trust company organized
under this law or the law of the State of North Dakota."
He reports t h e result to t h e board (4664). In the chapter
in the Code on t h e state examiner, a list of t h e details
which he must examine is given as follows: Validity and
a m o u n t of securities held, w h a t transactions each b a n k
is carrying on foreign to its legitimate purposes, a n d its
compliance with law generally. The examiner m u s t report t h e results of examinations to t h e governor, who m a y
publish t h e m (145). The directors, in J a n u a r y and July
of each year, m a k e a thorough examination of the assets
of their bank, examine stocks, checks, certificates of deposit, and cashier's checks, count cash, examine loans
and discounts with collateral, compare t h e aggregate
with the records, and report t h e result t o t h e banking
board (4667). When t h e board is satisfied of t h e insolvency of a b a n k it takes charge through a temporary




498

North

Dakota

— State

Banks

receiver; before doing this the board makes an examination (4668). The examiner makes a thorough examination in voluntary dissolutions (4647).
IV.—RESERVE REQUIREMENTS.

Every bank must keep in available funds an amount,
which, after deducting the amount due to other banks,
will equal 20 per cent of total deposits. Three-fifths of
this amount may consist of balances due from good
solvent state or national banks or trust companies, which
carry a reserve sufficient to entitle them to act as depositaries, are located in convenient commercial centers, and
have been approved by the state banking board; the
remaining two-fifths must consist of actual cash, which
must not include cash items. No paper may be carried
as cash or a cash item except legitimate bank exchange
which will be cleared on the same or the next day. When
reserves fall below the required amount the bank must
not make new loans or discounts, except by purchasing
sight exchange, nor make dividends (4655).
V.—DISCOUNT AND LOAN RESTRICTIONS.

Among banking powers is that of " loaning money upon
real or personal security, or both/' No bank may carry
among its assets loans dependent wholly upon real estate
security in an amount exceeding one-half its capital and
surplus; whatever loans on real estate there are must be
upon first mortgage (4639).
The total liability of any person, corporation, or firm,
including in firm liabilities those of the members, for
money borrowed "and paper of the same parties as
makers thereof, purchased," must not exceed 15 per cent
of paid in capital and surplus, but the discount of bills of
exchange drawn against existing values, or loans made




499

N at tonal

Monetary

Commission

upon produce in transit or store as collateral, if all the
papers are properly hypothcated, are not considered
money borrowed. Moreover, a bank may discount paper
actually owned by the person negotiating it without being
considered as adding to its loans (4657, amended by 1909,
chap. 45). No bank may loan on the security of its own
shares unless it is necessary to prevent loss on a previous
debt, in which case the stock must be disposed of within
six months (4654).
VI.—INVESTMENTS.

A bank may hold only such real estate as is necessary
for its accommodation in business, not exceeding 25 per
cent of a capital of over $10,000, and 30 per cent if the
capital is $10,000 or less; such as is mortgaged for loans
or previous debts; such as is conveyed to the bank in
satisfaction of previous debts; such as is purchased at
judicial sales under liens held by the bank or is purchased to secure debts due it; but no bank may hold real
estate under mortgage or that purchased to secure an
indebtedness for longer than five years (4640).
No bank may hold its own shares unless necessary to
prevent loss on a previous debt, in which case it must
dispose of the stock within six months (4654).
No bank may employ its assets in trade or commerce,
nor invest "in the stock of any corporation, bank, partnership, firm, or association, nor shall it invest any of its
assets in speculative margins of stocks, bonds, grain,
provisions, produce, or other commodities, except that it
shall be lawful for banks to make advances for grain or
other products in store or in transit to market" (4672).
VII.—OVERDRAFTS.

Any bank officer or employee who pays out the funds
of the bank on the order of one who has not on deposit a




500

North

Dakota

— State

sum equal to the check is personally liable
for the amount paid (4669). The officer or
a bank or savings bank who overdraws his
obtains the funds is guilty of a misdemeanor

Banks
to the bank
employee of
account and
(9282).

X.—UNAUTHORIZED BANKING.

No person, except national banks, may transact banking business or use such words as " bank " on signs, advertisements, letter heads, etc., without complying with the
provisions of the banking chapter. Violation of this
provision is a misdemeanor punishable by fine of from
$500 to $1,000, imprisonment for not less than ninety
days, or both (4662).
XI.—PENALTIES.

Overdraft by an officer or employee of a bank or
savings bank a misdemeanor (9282). Every director
of 4<a corporation having banking powers" who votes to
loan or discount to a director in an illegal amount is
guilty of a misdemeanor (9277). The state banking
board may impose a penalty of from $100 to $500 on
associations organized under the banking chapter which
fail to make good their reserve within thirty days after
notice (4655). Every officer or employee of any association organized under the banking chapter who knowingly makes false statements, etc., to deceive an examiner,
or subscribes to a false report, is guilty of forgery (4659).
Every association which fails to report forfeits $200 for
each delinquency (4652). Any officer, director, etc., of a
' 'banking association" who receives deposits knowing
that the association is insolvent is guilty of a felony,
punishable by fine not to exceed $10,000, imprisonment
not to exceed five years, or both (4660 and 4661; and see
an apparently overridden provision in the Code in 9283).




501

National

Monetary

Commission

" Any officer of a banking association, savings bank, or
trust company" violating provisions for which no particular penalty is provided suffers a fine of from $50 to
$500 for each offense (4658). It is a felony not to make
whatever returns the examiner asks for (146). It is also
a felony to hinder examination, punishable by a $1,000
fine or one year's imprisonment (147).
SAVINGS BANKS.
Savings banks are expressly mentioned in the sections
of the banking act, creating the banking board (4635);
requiring reports (4652); subjecting banks to examination (4664); etc. See introductory paragraph under this
State.
TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

Among the powers of an annuity, safe deposit, surety,
and trust company is that " t o take, accept, and hold on
deposit or for safe-keeping any and all moneys, bonds,
stocks, and other securities or personal property whatsoever which any * * * person or persons shall be authorized or required by law or otherwise to deposit in a
bank or other safe deposit;" also the power " t o accept and
receive deposits of money for general savings account
for safe keeping or investment" (4682). Despite these
powers, however, it is provided that "no such company
shall engage in any banking, mercantile, manufacturing,
or other business except as is * * * expressly authorized" by the trust company chapter (4689).
The capital of a trust company must be not less than
$100,000, divided into shares of $100 each. Not less than
$50,000 must be actually paid in, invested, and deposited
with the state treasurer (4678 and 4679). The full




502

North

Dakota

— Trust

Companies

a m o u n t of t h e subscribed capital m u s t be paid in within
two years after business is begun (4691).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

DIRECTORS.

There is no especial provision for liability of t r u s t comp a n y shareholders.
There m u s t be from nine to fifteen directors, a majority
of whom must be citizens of North Dakota, and each of
whom m u s t own at least 10 shares of stock (4680). Directors are responsible to the owners of moneys received on
deposit or in t r u s t for the validity etc., of investments
and securities a t the time the investments are m a d e and
for the safe-keeping of t h e securities. Special provisions
in a t r u s t are followed, free from this liability (4683).
III.—SUPERVISION.

See Banks, I I I , for officials in charge of t r u s t company
business in North Dakota. There is a $50,000 deposit
with t h e state treasurer required before t h e corporation
is allowed t o begin business. Certain securities permissible for this deposit m u s t be approved by t h e examiner
and auditor (4678 and 4679). The examiner has over
t r u s t companies all authority conferred upon him over
banking corporations. If it appears from an examination or report or from other information t h a t a t r u s t comp a n y has committed a violation of law or is conducting
its business unsafely or t h a t t h e deposit with t h e state
auditor is insufficient, t h e examiner orders a discontinuance of t h e practices or a further deposit. Whenever the corporation refuses to comply, or it appears t o
t h e examiner t h a t it is unsafe for it to continue business,
he communicates t h e facts to t h e attorney-general and
he thereupon is authorized t o institute whatever proceedings the case requires (4692).




503

National

Monetary

Commission

REPORTS.

When acting under appointment of the court a trust
company reports fully to it. It renders the state examiner a detailed accpunt%of its condition on the ist of
June in each year and such further accounts as he requires. A condensed statement of the annual report,
approved by the examiner, must be published in a local
newspaper (4690). Note that the banking chapter on
reports includes trust companies in terms (4652).
EXAMINATIONS.

The state examiner once in every six months and without notice to the trust company, examines it, exercising
such authority as he does over banks (4692). Note here
also that trust companies are mentioned in the section
providing for examination of banks (4664).
V.—DISCOUNT AND LOAN RESTRICTIONS.

A trust company may loan "upon such securities as
may be deemed advisable by its board of directors''
(4682). Loans to officers, directors, and employees are
forbidden (4689).
VI.—INVESTMENTS.

A trust company may hold such real estate and personal
property as may be necessary for the convenient transaction of its business, etc.; real estate acquired by
foreclosure in settlement of debts, etc., may continue to
be held if the directors think best. It may purchase at
foreclosure, judgment sales, etc. (4632). The directors
may invest "all moneys received * * * on deposit
or in trust * * * in such securities as are not * * *
expressly prohibited" by the trust company chapter
(4683).




504

North

Dakota

— Trust

Companies

The $50,000 deposit and certain trust funds must be
invested in a prescribed way: In United States bonds;
North Dakota bonds; bonds of other States that are
approved by the auditor and examiner; bonds of certain
North Dakota municipalities; and first mortgages of
unincumbered real estate in North Dakota worth three
times the loan (4678 and 4688).
VII.—OVERDRAFTS.

Directors, officers, and employees of a trust company
must not become indebted to the company " b y means of
any overdraft * * * or other contract" (4689).




505

OHIO.
I n 1908 t h e legislature of Ohio, in an act printed a t page
269 of t h e laws of Ohio for t h a t year, provided a complete
set of rules for t h e organization of banks and their inspection. This s t a t u t e supersedes t h e various banking laws
appearing in Bates' Annotated Ohio Statutes, sixth edition, 1908, except those with regard to deposits of public
moneys in banks and t h e reports of such depositaries
(Bates' Statutes, sees. 1136-1 et seq., and 1536-655); and
those prohibiting banking b y limited partnerships (sec.
3141). In another act found at page 528 of t h e laws
of 1908 t h e legislature regulated t h e organization and
inspection of building and loan associations and savings
associations. This digest covers simply t h e act dealing
with banks, provisions of which are applicable t o banks,
savings banks, and trust companies. So m a n y of t h e
provisions apply t o those three classes indiscriminately
t h a t t h e digest is arranged under four heads: (1) Those
provisions which apply to all; (2) those which apply to
''commercial b a n k s ; " (3) those which apply t o savings
b a n k s ; (4) those which apply to trust companies. The
numbers in parenthesis refer to sections of t h e act. No
legislation is here digested which is more recent t h a n t h e
session laws of 1908. There was a special session in 1909,
a t which, however, no laws were passed affecting the
topics covered by the digest.




506

Ohio

—

General

Provisions

GENERAL PROVISIONS.
I.—TERMS OF INCORPORATION.

Any number of persons not less than five, a majority of
whom are citizens of Ohio, may establish " a commercial
bank, a savings bank, a safe deposit company, a trust company or * * * a company having departments for
two or more or all of said classes of business" (i). All
these corporations must have a capital stock (18). If a
corporation combines two or more classes of business, it
must keep separate books of account for each class and the
transactions relating to each class are governed by the provisions of the act specifically applicable to the particular
class (35).
The general provisions for capital are as follows: The
capital must be divided into shares of $100 each. The
capital of a commercial bank shall not be less than $25,000;
of a savings bank not less than $25,000; of a commercial
bank and savings bank not less than $25,000; of a commercial bank and safe deposit company not less than
$25,000; of a savings bank, commercial bank, and safe
deposit company not less than $50,000; of a trust company
not less than $100,000; of a trust company and safe deposit company not less than $100,000; of a trust company
and savings bank not less than $100,000; of a trust company, savings bank, and safe deposit company not less than
$125,000; and of a trust company, savings bank, commercial bank, and safe deposit company not less than
$125,000 (2). The entire capital stock must be subscribed and at least 50 per cent paid in before the corporation can begin business; the rest must be paid in in
monthly installments of at least 10 per cent, payable at
the end of each month after the superintendent of banks
has authorized the corporation to commence business (11).




507

National

Monetary

Commission

The board of directors of any corporation may declare
a dividend of as much of the net profits as they shall deem
expedient, providing first for all expenses, losses, interest,
and taxes due. Before declaring a dividend, however,
not less than one-tenth of the net profits for the preceding dividend period must be carried to a surplus fund
until the surplus amounts to 20 per cent of the capital (29).
II.—LIABILITIES AND DUTIES OF STOCKHOLDERS AND
DIRECTORS.

An amendment to section 3 of Article X I I I of the constitution, adopted in 1903, limits the liability of a stockholder for the debts of his corporation to the amount
unpaid by the stockholder on his stock.
There must be not fewer than five nor more than thirty
directors (6 and 22). They must meet at least once a
month (22). Each director must own at least five shares
of stock and three-fourths of the directors must be residents of Ohio (25). The board of directors may appoint
an executive committee, to consist of at least three
directors, to meet not less frequently than once a month,
and to approve or disapprove all loans and investments,
subject to the control of the board of directors (23). A
committee of two directors or stockholders must be
appointed annually by the board of directors to examine
the assets and liabilities of the corporation and to report
to the directors. This report is filed with the superintendent of banks (30).
III.—SUPERVISION.

The state official in charge of banking is the superintendent of banks. His term is four years (78), and his
salary $5,000 a year (8 2). Neither he nor the examiners he
appoints may be interested in banking (87). They are not




508

Ohio

— General

Provisions

allowed to receive extra pay (95). They must keep secret
all information obtained in the course of examinations,
except that which the public duty requires them to report
(106). No person employed by the superintendent may
be appointed receiver of a banking institution (107).
No business may be done until the superintendent has
authorized the corporation to begin (10). The superintendent may withhold his certificate that the corporation
has complied with law if he has reason to believe that the
corporation has been formed for any other purpose than
the legitimate business contemplated by the statute (16).
Under certain circumstances the superintendent may
institute proceedings for a receivership. He must do so
if by the cancellation of stock of a delinquent holder the
capital of the corporation is reduced below the legal
minimum and is not increased to that point by additional subscriptions within sixty days from the date of
the cancellation (14); also if a corporation has refused to
pay its depositors, or is insolvent, or if its capital has been
impaired for a period of ninety days, but in certain cases
the corporation may show that the interests of its depositors, creditors, and stockholders will not be endangered
by allowing it to continue business, under which circumstances the superintendent must not apply for the receiver
(41); also if a corporation refuses to be examined (99);
if it appears from a report that the capital of a corporation is impaired, and upon examination the superintendent finds an impairment, which the corporation does
not make good after written notice (100 and 101); if any
banking institution fails to maintain its required reserve
and upon notice from the superintendent fails to make
good the reserve (52, 58, and 75); if a banking institution,
having purchased shares of its own stock to save itself
from loss on a previous debt, fails to dispose of the stock
on thirty days' notice from the superintendent (53).




509

National

Monetary

Commission

The superintendent may order a banking institution t o
sell certain securities which he considers undesirable (500
576, 706).
REPORTS.

All banking institutions report to the superintendent
n o t less t h a n four times each year, at such times and in
such form as he requires (108). The reports exhibit in
detail and under appropriate heads a statement of
resources, assets, and liabilities at the close of business
of any past day specified by t h e superintendent; t h e day
is uniform throughout the S t a t e (109). The reports are
required to be sent to the superintendent within ten days
after receipt of his request, and they must be published in
a local newspaper ( n o ) . The superintendent m a y call for
special reports whenever he thinks t h e m necessary ( i n ) .
At t h e end of each fiscal year the superintendent reports
t o t h e governor, giving a summary of t h e condition of all
reporting companies, with an abstract of their total
capital, liabilities, and resources, classifying the report
b y corporations, specifying t h e a m o u n t held by t h e reporting banks in lawful money, and adding whatever other
information he thinks necessary. This report also includes
a statement of corporations whose business has been
closed, with figures as to their liabilities and t h e a m o u n t
paid their creditors; items with regard to t h e conduct of t h e
d e p a r t m e n t and its receipts from fees and penalties (114).
EXAMINATIONS.

Permission to begin business is not given until t h e
superintendent has made a preliminary examination t o
assure himself t h a t t h e proper a m o u n t of capital has
been paid in, and t h a t t h e names and residences of
directors have been furnished, and t h a t other preliminary requirements of law have been complied with (15).




510

Ohio

—

General

Provisions

The superintendent or one of his examiners a t least
twice a year m u s t thoroughly examine t h e cash, bills,
securities, accounts, and affairs of all banking corporations (96). If the board of directors or the stockholders
of a banking institution request it and the superintendent
thinks such an examination desirable, a special examination m a y be m a d e (93). All examinations m u s t be m a d e
without previous notice to t h e corporation examined (104).
A committee of a t least two directors or stockholders is
appointed annually by t h e board of directors to examine
the assets and liabilities of the corporation and to report
the result to the board of directors. These reports are
filed with t h e superintendent (30).
V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

No banking corporation is allowed to loan money on
pledge of shares of its own capital stock, unless so taking
t h e m is necessary to prevent loss upon a debt previously
contracted (53). No loan is allowed to be made to an
officer of any banking corporation unless duly authorized
b y a majority of t h e directors. When so authorized t h e
loans must be m a d e and secured in the same manner as
loans to other persons (23). (See also VI, below.)
VI.—INVESTMENTS.

No banking corporation is allowed to purchase or hold
its own shares unless t h e purchase is necessary to prevent
loss upon a previous debt, and stock so purchased m u s t
be sold within six months from its purchase on t h i r t y days'
notice from the superintendent of banks (53). No banking corporation m a y invest more t h a n 20 per cent of its
capital and surplus in any one stock, security, or loan,
unless it be in obligations enumerated in paragraphs (b),
(c), and (d) of section 50, digested under Banks, V I ,




5u

National

Monetary

Commission

infra, or in a building and vaults (64); as appears under
Banks, however, there may be a greater single loan than
this 20 per cent, by a commercial bank, if it is on farmland mortgage (47).
VII.—OVERDRAFTS.

Although there is no provision in the act expressly
authorizing overdrafts, it seems clear they were contemplated as permissible, for in limiting the amount of individual loans both by commercial banks and by savings
banks the act contains the expression, " including overdrafts" (47 and 63).
X.—UNAUTHORIZED BANKING.

Corporations are not allowed to use names likely to
mislead the public as to the character or purpose of the
business authorized by the charter (3). No banking corporation is allowed to advertise by newspaper, letter
head, etc., a larger capital than is actually paid in (38).
No banking institution incorporated under the laws of
any other State is permitted to do any banking business in
Ohio except to lend money (80).
XI.—PENALTIES.

An officer or employee who certifies checks fraudulently
suffers fine of not more than $5,000, or imprisonment not
more than five years nor less than one year, or both (33).
Officers and employees who are guilty of any of the frauds
enumerated in section 44 are punished by imprisonment
not more than thirty years, or fine not exceeding $10,000,
or both (44). All persons connected with a banking institution who fail to appear when summoned to testify by the
superintendent or refuse to answer forfeit $100 (97). Any
person connected with a banking institution who aids in




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Banks

the receipt of funds when he knows the bank is insolvent
suffers a fine of not more than $5,000, or imprisonment not
more than five years, or both (116).
Corporations advertising a larger capital than actually
paid in forfeit $500 for every offense (38).
If the superintendent or one of his employees fails to
keep official information secret or makes false reports, he
loses his office and suffers fine of not more than $500, or
imprisonment for not less than one year or more than five
years, or both. He is besides liable to the party damaged
by his disclosures (106).
If a company fails to submit a report or to publish one
after ten days' notice from the superintendent, it is subject to a penalty of $100 a day (112).
BANKS.
IV.—RESERVE REQUIREMENTS.

Commercial banks must keep a reserve of at least 15
per cent of the total deposits. Six per cent of demand
deposits and 4 per cent of time deposits must be kept in
the vaults of the bank in lawful money, national-bank
notes, or bills, notes, and gold and silver certificates of the
United States. The part of the reserve not kept in the
vaults of the bank must be kept subject to demand in
other banks or trust companies designated as depositaries
by the directors in a resolution which they certify to the
superintendents of banks (51).
V.—DISCOUNT AND LOAN RESTRICTIONS.

A commercial bank may receive deposits on which
interest is allowed. It may lend on personal security,
and discount, buy, and sell negotiable paper (49). The
loan to any one person, firm, or corporation must not
S. Doc. 3 53, 61-2




33

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exceed 20 per cent of t h e paid-in capital and surplus of
t h e b a n k unless the loan is secured b y a first mortgage on
improved farm property in a sum not to exceed 60 per
cent of t h e value of t h e property. The total liabilities,
including overdrafts, of any person, company, or firm, to
a n y bank, either as principal debtor or as endorser, for
money borrowed, m u s t not exceed 20 per cent of t h e
paid-in capital stock and surplus. Discount of commercial paper, however, is not considered as lending
money (47).
Loans by a commercial b a n k upon real estate security
m a y be m a d e only upon a general resolution by a twothirds vote of the directors, stating to w h a t extent t h e
officers m a y loan on real estate. The aggregate a m o u n t
of such loans m u s t not exceed 50 per cent of t h e capital,
surplus, and deposits, except t h a t a b a n k t h a t combines
commercial and savings business m a y lend u p t o 60 per
cent on real estate if authorized by two-thirds of t h e
directors. Loans made on real estate m u s t be upon real
estate in Ohio or in immediately adjacent States, a n d m u s t
not exceed, inclusive of prior incumbrances, 40 per cent
of the value of t h e real estate, if unimproved, or 60 per
cent if improved (48).
See also V I , below.
VI.—INVESTMENTS.

Commercial banks may hold real estate only as follows:
(a) Real estate on which its business buildings are erected,
b u t the cost of this real estate must not exceed 60 per cent
of capital and surplus, {b) real estate mortgaged to the
corporation to secure loans, (c) real estate purchased by
the corporation a t sales for closing liens held by the corporation, b u t this real estate must be sold within five
years; (d) leasehold for business purposes (46),




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S a v i n g s

Banks

Commercial banks may invest their capital, surplus, and
deposits in or loan them upon the following: (a) Personal
or collateral securities; (b) securities of the United States
or foreign governments; (c) bonds of States of the United
States; (d) securities of political subdivisions of States
of the United States and of Canada; (e) mortgage bonds
of any corporation which has paid dividends at 4 per cent
for four years, but the bank must not invest in this sort
of security at a rate of more than 80 per cent of the market value of the bonds, and the superintendent may order
that undesirable securities be sold within six months;
(/) notes secured by mortgages on realty where the amount
loaned, including prior incumbrances, is not over 40 per
cent of the value of the realty if unimproved and not over
60 per cent if improved; but not more than 50 per cent
of the capital, surplus, and deposits of a bank may be
invested in real estate securities of this sort (50).
SAVINGS BANKS.
IV.—RESERVE REQUIREMENTS.

Savings banks are required to keep as a reserve the
same percentage of their total deposits as commercial
banks are, but savings banks may invest one-half of the
reserve required to be kept in vaults in the securities
enumerated in (b) and (c) of section 50 (supra); and
where the reserve of any savings bank required to be kept
in its vaults is over $500,000, that excess may be invested
in securities of the United States (56).
V.—DISCOUNT, LOAN, AND DEPOSIT RESTRICTIONS.

The total liabilities, including overdrafts, of any person,
firm, or corporation to a savings bank for money borrowed, must not exceed 20 per cent of the capital and




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surplus, but the discount of business paper is not considered
as money borrowed (63).
Any savings bank may receive on deposit any sum of
money that may be offered for deposit by any person,
firm, or corporation, or by any municipality or State, or
that may be ordered deposited by any court. It may pay
such interest as is agreed upon (55).
See also VI, below.
VI.—INVESTMENTS .

Savings banks may hold land as commercial banks
may (54; and see 46).
After providing for their reserve, savings banks may
invest the residue of their funds in, or loan money on,
discount, buy, or sell commercial paper, and may invest
their capital, surplus, and deposits in, and buy and sell the
following: (a) The securities mentioned in (a), (6), (c),
(d), (e)t and (/) of section 50 (supra), except that savings
banks may loan not more than 75 per cent of capital,
surplus, and deposits on notes secured by mortgage of
realty. Loans on personal security must be on the obligation of more than one person, must be payable not
more than six months from their date, and must not exceed
in the aggregate 30 per cent of the capital, surplus, and
deposits of the investing savings bank, (b) Stocks which
have paid dividends for five consecutive years; also
bonds and notes of corporations, if the board of directors
or the executive committee of the investing savings bank
so vote. Savings banks shall not invest in stock of other
banking corporations. The superintendent may order
undesirable securities sold within six months, (c) Promissory notes, if secured by collateral approved by the
directors (57).




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Trust

Companies

TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

There are the following special provisions for the capital
of trust companies: No trust company may accept trusts
until the paid-in capital of the corporation is not less
than $100,000 and until the corporation has deposited
with the state treasurer $50,000 if its capital is $200,000
or less, and $100,000 if its capital is more than $200,000.
This deposit may be in cash, in bonds of the United
States, of Ohio, of municipalities in Ohio or in other
States, and in first-mortgage bonds of railroad corporations
that have paid dividends of 3 per cent for five years.
The treasurer holds this fund as security for the company's performance of trusts. The securities may be
exchanged (69). The trust deposits, accounts, investments, etc., are required to be kept separately (73 and 76).
III.—SUPERVISION.

Control of the trust business is assured by the deposits
with the state treasurer (69).
EXAMINATIONS.

A court in which a trust company is acting as trustee
has authority to appoint persons to investigate the corporation with respect to the trust in question. Courts
may examine trust companies which they purpose making
trustees (77).
IV.—RESERVE REQUIREMENTS.

Trust companies are required to keep the same reserve
: is savings banks {supra), but they need not keep a reserve
1 pon trust funds (75).




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V.—DISCOUNT AND LOAN RESTRICTIONS.

No t r u s t company is allowed to lend except on security
of bonds or stocks such as t h e corporation is allowed t o
invest in, or mortgage on real estate where t h e a m o u n t
loaned, inclusive of prior encumbrances, does n o t exceed
60 per cent of t h e value of t h e real estate. No t r u s t comp a n y is allowed to lend to any one person, firm, or corporation more t h a n 20 per cent of its capital and surplus (72).
See also VI, below.
VI.—INVESTMENTS.

Trust companies may hold real estate as commercial
banks m a y {supra, 46). This is, however, exclusive of
t r u s t property (66).
The capital and surplus of trust companies, t h e deposits, and, unless the terms of a trust provide for other
investment, t h e trust funds must, over and above t h e
reserve, be invested in or loaned on t h e following: (a) T h e
securities mentioned in {b), (c), {d), (e), and (/) of section
50 {supra), b u t trust companies are not allowed to loan
more t h a n 60 per cent of t h e capital, surplus, and deposits on notes secured by mortgage on real estate, and
t h e investment in notes so secured may be m a d e only if
the directors approve; (6) stocks which have paid dividends for five years and bonds when they are authorized
b y t h e majority of the directors or the executive committee, b u t the superintendent m a y order undesirable
securities sold within six m o n t h s , (c) promissory notes
when secured by collateral approved by the directors.
Trust funds, together with t h e capital and surplus of
t h e t r u s t company, may be invested also in ground rents
when authorized by the directors. Not more t h a n 20 per
cent of the capital and surplus may be invested in a n y
one security or loan unless it be the securities in (6), (c),
and (d) of section 50, or in providing a building and v a u l t s
(70 and 71).




518

OKLAHOMA.
During the session of 1907-8, the legislature of Oklahoma passed an act, found at page 125 of the session laws,
designed apparently to be a complete banking law. Two
other laws on banking passed at t h a t session, namely, t h a t
on page 145 and t h a t on page 152, are both marked in the
session laws as having been repealed by the act a t page
125; since t h e act at page 125 became a law later t h a n the
other two, and repealed all laws inconsistent with it, it
seems safe to assume t h a t the acts a t page 145 and 152
are, as stated in the session laws, repealed. The only
other s t a t u t e on t h e subject of banking passed after the
revision of the territorial statutes of Oklahoma in 1903
and prior to 1908 is a 1905 act, t h a t is clearly repealed by
t h e recent banking law. Various amendments to the
recent law, made still more recently, by t h e 1909 legislature, are included in t h e digest. In the Revision of 1903
is a chapter (VIII) on ' ' B a n k s and banking," of which
m a n y sections are found in the recent banking act. I t
seems clear t h a t t h e recent act, in repealing all acts inconsistent with it, m e a n t t o wipe out this chapter. Conceivably some of its provisions are still law, b u t if so t h e points
t o be determined are matters of s t a t u t o r y construction too
nice to warrant hazarding opinions on them in this digest.
The chapter in the Revision of 1903 is for these reasons
disregarded. There is a chapter in t h e Revision of 1903




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at page 381 that deals with trust companies. Whether the
statute of 1907-8, the terms of which are for the most part
applicable to " banking corporations," or the trust company statute, which in its title is stated to apply to u savings and trust companies," applies to savings banks is a
matter of doubt. The heading " Savings banks," is therefore abbreviated in the digest; the provisions of the act of
1097-8 are digested under the title " Banks," and those of
the trust company chapter under the title "Trust companies." The Roman figures in parenthesis refer to the
article of the act of 1907-8, and the Arabic figures refer
to the section in the particular article, as renumbered
by the 1909 amendments; this way of citing that act is
adopted because so many of the references in the digest are
thus shortened. Other citations explain themselves.
BANKS.
I.—TERMS OF INCORPORATION.

Banks are forbidden to do any business beyond the
regular banking powers enumerated in the statute, unless
they have complied with the laws of the state relating to
trust companies (I, 3).
Incorporators must be approved by the commissioner
(i, i)The capital stock must be fully paid up. It must be
not less than $10,000 in towns of 500 or less; not less than
$15,000 in towns of from 500 to 1,500; not less than $25,000
in cities and towns of from 1,500 to 6,000; not less than
$50,000 in cities of 6,000 to 20,000; and not less than
$100,000 in cities of over 20,000 (I, 4, amd. by 1909, p.
121). The shares are of $100 each (I, 1).




520

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State

Banks

Dividends m a y be declared from net profits, b u t before
t h e declaration, not less t h a n one-tenth of t h e net profits
for t h e last preceding period m u s t be carried t o surplus
fund until t h e fund amounts t o 50 per cent of t h e capital.
Dividends m u s t be declared on J a n u a r y 1 and J u l y 1, if
a t all, and m u s t be reported t o t h e b a n k commissioner
(I, 23). Capital m u s t never be withdrawn (I, 25).
(For restrictions on power t o borrow, see V, infra.)
II.—LIABILITIES

AND

DUTIES

OP

STOCKHOLDERS

AND

DIRECTORS.

The shareholders of every b a n k are additionally liable
for t h e a m o u n t of stock owned and no more (I, 9).
There m u s t be from three to thirteen directors, each t h e
holder of $500 of t h e stock of t h e bank. Any director or
other person who participates in a violation of t h e banking
laws is liable for all damages which the bank, its stockholders, depositors, or creditors m a y sustain. There m u s t
a t be least two regular meetings a year, a t each of which t h e
directors examine thoroughly the affairs of t h e b a n k (I, 6).
Any b a n k officer or employee who pays out t h e funds of
the bank on check, order, or draft when t h e drawer has
not t h e proper sum on deposit is liable t o t h e b a n k for
t h e a m o u n t paid (I, 30).
III.—SUPERVISION.

The officer charged with t h e general duties of supervising
banks is t h e b a n k commissioner, who holds office for four
years, m u s t n o t be an officer or employee of any b a n k
or person interested financially in a bank, a n d m u s t have
had a t least three years' practical experience as a banker
( I I I , 1). His salary is $2,500 a year; he has eight assistants ( I I I , 4, amd. b y 1909, p. 119).
The b a n k commissioner must approve of t h e proposed
incorporators of a banking corporation ( 1 , 1 ) . The b a n k




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commissioner fixes t h e m a x i m u m interest which banks
m a y pay upon deposits, and when it appears from a report
t h a t a b a n k has received deposits in excess of ten times
paid-in capital and surplus, deposits of other banks n o t
included, he requires t h e bank to make the necessary increase in capital and surplus within thirty days, or cease
receiving deposits (I, 3, amd. b y 1909, pp. 120, 121).
T h e commissioner approves of increases or decreases in
the capital stock of banks (I, 5). He m a y remove
unfit officers of banks (I, 7). H e has authority in case
of a violation of any of the provisions of t h e act b y the
officers or directors of any bank to close it and liquidate it
(I3, 8). If t h e reserve of any b a n k falls below t h e requirement, he notifies t h e b a n k to m a k e it good, and if it fails t o
do so for t h i r t y days he takes possession of it as insolvent
(I, n ) . Banks m a y voluntarily place their affairs under
his control (I, 20). When a b a n k appears to be borrowing
habitually for t h e purpose of reloaning, the commissioner
requires it to pay off the borrowed money (I, 31). W h e n
t h e capital of any bank is impaired, the commissioner
notifies it t o make t h e impairment good within sixty days
(I, 32). If any officer of a b a n k refuses to submit its
affairs to inspection, or interferes with examination, t h e
commissioner m a y proceed to wind up the bank's business
(I, 35). In general, whenever any bank or t r u s t company
voluntarily places itself in the hands of the commissioner,
or is adjudged insolvent or t o h a v e forfeited its franchise
to conduct a banking business, or whenever t h e commissioner is satisfied of the insolvency of a bank or t r u s t company, he may, after examining its affairs, t a k e possession
of it and wind u p its business (II, 4).
REPORTS.

A list of names of stockholders, residences, and a m o u n t s
held b y each, is sent t h e commissioner as a preliminary




522

Oklahoma

—

State

Banks

to receiving his certificate of incorporation (1,2). At least
four times a year, and oftener if called upon, every bank
reports to the commissioner in the form he prescribes,
showing the resources and liabilities of the association at
the close of business on a past day specified. This report
must be transmitted to the commissioner within ten days
after receipt of his request. It is published in a local newspaper. The commissioner may call for special reports
whenever he thinks them necessary; they must relate to a
date prior to the call (I, 17). The requirement of reports,
whenever the commissioner calls for them, and at least
four times a year, is extended to trust companies and such
national banks as have taken advantage of the depositors'
guaranty fund protection (III, 7). Ten days after a dividend is declared every bank must forward to the commissioner a statement of the dividend and the amount carried
to surplus and undivided profits. Within ten days after
the first of January every bank must send to the commissioner a statement of receipts and disbursements for the
preceding year (I, 18). The examinations which directors
make at least twice a year at regular meetings are recorded
and forwarded to the bank commissioner (I, 6). A list of
names and residences of shareholders, with the number of
shares held by each, is sent to the commissioner each year
(I, 34). Reports to the commissioner of average daily
deposits for the preceding year are required, in order to
determine assessments for the guaranty fund (II, 2, amd.
b y 1909, p p . 122, 123).
EXAMINATIONS.

The bank commissioner or one of his subordinates visits
every bank and trust company at least twice a year and
oftener if he thinks it advisable, to make a full examination into the condition of the corporation (III, 3). The
commissioner makes a preliminary examination when the




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capital stock of any b a n k has been paid in in order t o
ascertain whether t h a t and other preliminaries h a v e been
complied with (I, 2). The directors of banking associations, at regular meetings held a t least twice a year,
thoroughly examine t h e affairs of t h e bank (1,6). In case
of voluntary liquidations, t h e commissioner makes an
examination t o be certain t h a t all liabilities have been
paid (I, 21). Whenever any b a n k or trust company voluntarily p u t s itself into the hands of the commissioner, or
whenever a b a n k or t r u s t company is adjudged insolvent
or to have forfeited its franchise, or whenever t h e commissioner is satisfied of the insolvency of a b a n k or t r u s t company, he examines its affairs before taking possession
(II, 4). After he has, with the assistance of t h e g u a r a n t y
fund, seen t h e institution through its difficulties, he examines it, if its stockholders have undertaken to p u t it in condition to resume business, before allowing it to reopen, in
order to m a k e sure its assets are repaired, advances from
t h e g u a r a n t y fund repaid, etc. (II, 8).
IV.—RESERVE

REQUIREMENTS.

E v e r y b a n k is required t o have on hand in available
funds t h e following sums: I n towns or cities of less t h a n
2,500, an a m o u n t equal to 20 per cent of entire deposits;
in cities of over 2,500, an a m o u n t equal to 25 per cent of
entire deposits. Two-thirds of this reserve m a y consist
of balances due from good solvent banks approved b y t h e
b a n k commissioner; one-third m u s t be cash. Moreover,
any b a n k t h a t has been m a d e depositary for t h e reserve
of another b a n k m u s t keep a 25 per cent reserve. When
t h e available funds fall below t h e requirements, t h e b a n k
in question m u s t not increase its liabilities, except b y dealing in sight exchange, nor m a k e dividends, until t h e reserve
has been restored. The commissioner in notifying such a
b a n k of its delinquency m a y refuse t o consider as reserves




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—

State

Banks

balances due from associations which fail t o furnish information required b y him to enable him to determine their
solvency (I, n ) .
V . — D I S C O U N T , L O A N , AND D E P O S I T R E S T R I C T I O N S .

Among t h e powers of banking corporations is t h a t of
lending money on chattel and personal security, or on real
estate secured b y first mortgages running not longer t h a n
a year; b u t t h e loans on real estate m u s t not exceed 20
per cent of t h e loans of t h e bank (I, 3, amd. b y 1909, p p .
120, 121). No b a n k m a y loan on shares of its own stock
unless it is necessary to take this security to prevent loss
upon a previous debt, in which case t h e stock m u s t be
gotten rid of within six months (I, 10 and 39).
The total liabilities to any b a n k of any person, company,
or firm for money borrowed, including in firm or company
liabilities those of t h e members, m u s t not exceed 20 per
cent of t h e capital of t h e b a n k paid in; the discount of
bills of exchange and of commercial paper actually owned
b y those discounting it is not considered as money borrowed (I, 12). The total indebtedness of the stockholders
of any incorporated b a n k to the b a n k m u s t never exceed
50 per cent of its paid-up capital (I, 39). No active managing officer of any b a n k organized under Oklahoma law
m a y borrow from his bank, directly or indirectly (I, 14).
Compare with t h e last-stated provision t h e older one,
which m a d e it a misdemeanor for t h e director of any corporation having banking powers t o vote a loan or discount
which would m a k e t h e total loans and discounts exceed
three times t h e capital paid in, or to vote a loan to a
director in an a m o u n t in excess of one-third of t h e
paid-in capital (R. S., 1903, 2545).
Banks m u s t not pledge their assets as collateral so as t o
give depositors or creditors a preference, b u t any b a n k m a y
borrow for temporary purposes not more t h a n 50 per cent




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of its paid-up capital, pledging assets as collateral. Whenever it appears to t h e commissioner t h a t a b a n k is borrowing habitually in order to reloan, he m a y require it t o
pay back t h e money borrowed. An}^ b a n k m a y rediscount and indorse its negotiable notes (I, 31).
No b a n k m a y receive deposits in excess of ten times its
paid-up capital and surplus, deposits of other banks n o t
included (I, 3, amd. b y 1909, p p . 120, 121).
VI.—INVESTMENTS.

A b a n k m a y hold such real estate as is necessary for t h e
convenient transaction of its business, b u t this m u s t not
exceed in value one-third of t h e paid-in capital; such real
estate as is conveyed to t h e b a n k in satisfaction of previous debts; and such as t h e b a n k purchases at judicial
sale under securities held b y it, provided it does not bid
more t h a n enough to satisfy t h e debt and interest. E x c e p t
t h e real estate held for its own accommodation in business,
t h e bank m u s t not hold real estate longer t h a n five years;
within t h i r t y days after t h e expiration of t h a t time it
m u s t sell it (I, 37). No b a n k m a y engage in trade or commerce, nor invest its funds in t h e stock of any other " b a n k
or incorporation," nor hold shares of its own stock, unless
necessary t o prevent loss on a previous debt, in which case
it m u s t sell t h e stock within six months from t h e d a t e it
acquired it (I, 10).
VII.—OVERDRAFTS.

Any officer or employee of a " b a n k , banking association, or savings b a n k " who knowingly overdraws his
account is guilty of a misdemeanor (R. S., 1903, 2550).
X.—UNAUTHORIZED BANKING.

I t is unlawful for any individual, firm, or corporation
t o receive deposits or do a banking business except under




526

Oklahoma

—

State

Banks

t h e banking or trust company statute. Violation of this
prohibition, either individually or as a member of someassociation or corporation, is a misdemeanor, punishable
b y a fine of from $300 t o $1,000, by imprisonment of from
t h i r t y days to one year, or both (I, 16). An officer who
receives deposits in a b a n k after its authority to transact
a banking business has been revoked is subject t o t h e same
penalty (I, 36).
XI.—PENALTIES.

Officers, directors, etc., who m a k e false reports, false
entries in books, etc., in order to deceive anyone concerned
with the condition of t h e bank, are guilty of a felony, punishable b y a fine of not more t h a n $1,000, imprisonment
of not more t h a n five years, or b o t h (I, 13). Any officer,
director, etc., who receives deposits with knowledge of
his bank's insolvency is guilty of a felony, punishable b y
a fine of not more t h a n $5,000, imprisonment for not more
t h a n five years, or b o t h (I, 15). Officers, directors, employees, etc., who fail to perform duties required b y t h e
statute, or fail to conform to the requirements of t h e commissioner, are guilty of a felony, punishable by a fine of
not more t h a n $1,000, imprisonment of not more t h a n five
years, or b o t h (I, 26). Any active managing officer of a
b a n k who borrows from t h e bank, and any officer authorizing such a loan, is guilty of larceny of t h e a m o u n t borrowed (I, 14). I t is also a felony to certify a check for
which there are no funds (I, 28), or t o commit various
frauds in t h e n a t u r e of embezzlement (I, 29). The banking board m a y pay sums of $500 out of t h e guarantyfund as rewards for securing the conviction of an officer,
director, etc., who violates the law (I, 27).
If any officer or employee of a bank advertises t h e
deposits of t h e corporation as guaranteed b y the S t a t e of
Oklahoma, he is guilty of a misdemeanor punishable b y a




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fine not t o exceed $500, imprisonment for t h i r t y days, or
b o t h (II, 7, amd. by 1909, pp. 123, 124).
Failure t o report subjects a b a n k t o a penalty of $50 a
d a y (I, 19).
The b a n k commissioner, or assistant, who neglects t o
perform any d u t y or makes a false statement, or is guilty
of misconduct in office, commits a felony, punishable b y
removal from office in addition t o any other penalties t h a t
m a y be provided (III, 8).
X I I . — D E P O S I T O R S ' GUARANTY SYSTEM.

In Article I I of t h e act of 1907-8 as amended, are found
t h e special Oklahoma provisions for t h e depositors' guara n t y fund. This fund is under the control of t h e s t a t e
banking board, composed of t h e governor, t h e lieutenantgovernor, t h e president of t h e board of agriculture, t h e
state treasurer, a n d t h e state auditor (II, 1). The second
section of t h e act was amended b y t h e 1909 legislature t o
provide a somewhat different system of assessment from
t h a t originally designed. The section as amended levies
an assessment against t h e capital stock of every b a n k and
t r u s t company organized or existing under t h e Oklahoma
statutes in order to create a guaranty fund equal to 5 per
cent of t h e average daily deposits of t h e institution during
its continuance in business. T h e assessments are payable
one-fifth during t h e first year and one-twentieth during
each of t h e following years until a 5 per cent assessment
has been fully paid. Whatever assessments were paid
under t h e s t a t u t e before it was amended are credited t o t h e
banks making them. Every year each b a n k and t r u s t
company reports t h e average daily deposits for t h e preceding year. After t h e 5 per cent assessment has been fully
paid, no additional assessments are levied except those
required b y emergencies and those made necessary b y
increased deposits in banks. Whenever t h e g u a r a n t y




528

Oklahoma

—

State

Banks

fund is reduced below 5 per cent of all deposits b y reason
of p a y m e n t s t o depositors of failed banks, t h e board levies
emergency assessments sufficient t o restore t h e impairment
u p to 5 per cent, b u t t h e aggregate of these emergency
assessments must never in any one calendar year exceed 2
per cent of average daily deposits of all banks and trust
companies. If t h e a m o u n t realized from emergency assessments is insufficient to pay claims against all failed
banks, t h e board delivers to each depositor having an unpaid deposit a certificate of indebtedness bearing 6 per cent
interest. These certificates are payable out of emergency
assessments which t h e board levies from year to year until
all t h e certificates with their accrued interest are fully paid.
As rapidly as t h e assets of failed banks are realized upon
b y t h e commissioner they are applied to t h e repayment to
t h e guaranty fund of all moneys paid out to depositors,
and toward refunding emergency assessments. Seventyfive per cent of the depositors' guaranty fund is invested
for t h e benefit of t h e fund in state warrants or other securities of the sort in which state funds are invested (II, 2,
amd. by 1909, pp. 122, 123). Banks and trust companies
organized after t h e enactment of t h e s t a t u t e pay 3 per
cent of their capital when they open for business, which
a m o u n t constitutes a credit fund subject t o adjustment at
t h e end of a year on t h e basis of average deposits. This
3 per cent p a y m e n t is not required of consolidations of
institutions which have complied with the s t a t u t e (II, 3).
Whenever a bank or t r u s t company voluntarily places
itself in t h e hands of t h e commissioner, or when it is insolvent or has forfeited its franchise, or whenever t h e commissioner is satisfied of its insolvency, he may, after due
examination of its affairs, t a k e possession and liquidate
it (II, 4). T h e depositors of such an insolvent b a n k or
trust company are t o be paid in full; and if t h e available
cash is insufficient t o do this then t h e banking board draws
S- D o c 3 53, 61-2




34

529

National

M o n et a ry

Cotnmissio

n

upon the guaranty fund and makes, if necessary, additional
assessments so as to pay these depositors. The State has,
for the benefit of the guaranty fund, a first lien upon all the
assets of the insolvent corporation (II, 5). The bank
commissioner liquidates the corporation with full receiver's
powers (II, 6).
The commissioner delivers to every bank or trust company which complies with the provisions of the statute a
certificate stating that safety to its depositors is guaranteed by the depositors' guaranty fund of Oklahoma.
This certificate is displayed in the place of business of the
corporation, which may also advertise to the effect that it
is protected by the guaranty fund. No bank, however,
may be permitted to advertise its deposits as guaranteed
by the State of Oklahoma (II, 7, amd. by 1909, pp. 123,
124).

After the commissioner has taken possession, a bank or
trust company may nevertheless place itself in condition
to do business again, but may not reopen until the commissioner has carefully investigated its affairs and has
assured himself that its credits and funds are repaired and
all advances from the guaranty fund have been fully
repaid (II, 8).
SAVINGS BANKS.
There seems to be no legislation dealing specifically
with savings banks. The act of 1908, when it says
" b a n k s " and "banking corporations," may or may not
be interpreted to include savings banks. The restriction
upon receipt of deposits while insolvent (I, 15), given
under Banks, probably does not apply to savings banks,
but a similar provision in the Revised Statutes, with higher
penalties, perhaps does, for its language is "bank, banking
house, * * * company, corporation, or parties engaged in the banking, broker, or deposit business" (R. S.,




530

Oklahoma

— Trust

Companies

1903, sec. 2551). Also the provisions making directors
guilty of a misdemeanor if they loan beyond three times
the capital stock of the corporation or loan to a director
in excess of one-third of the capital stock seem applicable
to savings banks, for the language is "any corporation
having banking powers" (R. S., 1903, sec. 2545). The
provision making it a misdemeanor for any officer or employee to overdraw his account is made applicable specifically to savings banks (R. S., 1903, sec. 2550).
One section of the act of 1907-8 applies to savings banks:
"All savings associations which do not transact a general
banking business" must keep on hand in actual cash 10
per cent of deposits, and a like sum invested in good bonds
of the United States, Oklahoma, or municipalities of
Oklahoma, worth not less than par (I, 11).
TRUST COMPANIES.
I.—TERMS OF INCORPORATION.

Among trust company powers is that " t o receive money
in trust or on general deposit with or without interest
* * * and to accept and receive savings accounts"
(R. S., 1903, sec. 1122, amd. by 1905, pp. 150, 151).
Moreover, in the prohibition on unauthorized banking is
the exception, "except as authorized by this act (i. e., the
banking law of 1907-8), or by the laws relating to trust
companies" (I, 16).
The capital stock of every trust company must be not
less than $100,000 in towns of less than 10,000, and not
less than $200,000 in towns of over 10,000. One-half
must be paid in before business is begun. The other half
of the capital stock must be paid in within six months
after organization. The total capital must not be more
than $10,000,000 (R. S., 1903, sec. 1124; and 1903, p. 85).




S3*

National

Monetary Commission

Dividends may be declared every six months or oftener,
but not while the corporation is insolvent nor so as to
render it insolvent (R. S., 1903, sec. 1125).
II.—LIABILITIES AND DUTIES 01? STOCKHOLDERS AND
DIRECTORS.

Every stockholder in a trust company is individually
liable for the debts of the corporation to double the
amount that is unpaid on the stock held by him (R. S.,
1903, sec. 1134).
There must be not less than five nor more than twentyfive directors, stockholders in the corporation (R. S., 1903,
sec. 1124). If the directors knowingly pay dividends
when the corporation is insolvent, or so as to make it
insolvent, they are liable for all debts contracted while
they are in office (R. S., 1903, sec. 1125).
Ill.—SUPERVISION .

Trust companies are subject to the provisions of Article
II, section 4, of the act of 1907-8, which allows the bank
commissioner to take possession of insolvent corporations.
A section of the old trust company statute, moreover, provided that if after examination a trust company was found
insolvent the "bank examiner of this Territory" should
immediately take charge of the assets of the company;
he should then make a thorough examination and if satisfied that the company could not resume business or liquidate its debts he should institute proceedings for a
receiver (R. S., 1903, sec. 1135). This is, no doubt,
superseded by the 1908 statute, which provides for the
commissioner's acting as receiver (II, 4).
Trust companies deposit $50,000 in certain securities to
secure their fiduciary obligations. If the sum named is
less than one-half the annual premiums and compensa-




532

Oklahoma

— Trust

Companies

tions of a n y company, it m u s t be increased t o equal t h a t
fraction (R. S., 1903, sec. 1133, amd. by 1905, pp. 151
et seq.).
REPORTS.
Full reports of t h e condition of each t r u s t company
were, b y t h e trust company act in t h e Revised Statutes,
required t o be exhibited b y t h e directors t o t h e stockholders annually before elections. The same section provided t h a t whenever t h e secretary of t h e treasury
required, each trust company should, within fifteen days
from t h e secretary's call, furnish a statement in t h e form
t h e secretary prescribed, showing t h e condition of t h e
corporation at t h e close of business on a past day, a
summary of this statement being published in a local
newspaper (R. S., 1903, sec. 1126). This requirement
must for t h e most p a r t be superseded b y the provision of
t h e 1908 statute, which gives t h e bank commissioner
power at any time he deems it necessary, and at least
four times a year, t o call upon every trust company for
a report of t h e company's condition on a given past day
(III, 7). Trust companies subject t o the guaranty fund
system m u s t also report average daily deposits at t h e end
of t h e year, as required of banks (II, 2, amd. b y 1909,
pp. 122, 123). Trust companies must annually report t h e
a m o u n t of their premiums and compensations t o determine t h e a m o u n t of their deposit with the state treasurer
(R. S., 1903, sec. 1133, amd. b y 1905, pp. 151 et seq.).
EXAMINATIONS.

The b a n k commissioner or a subordinate at least twice
a year, and oftener if he deems it advisable, visits each
bank and trust company t..at is subject to t h e provisions
of the 1908 s t a t u t e t o examine the condition of t h e
company's affairs ( I I I , 3).




533

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Mon etary

Commission

See Banks, III, for the examinations required to be
made at the beginning and at the end of the commissioner's possession of a trust company as receiver (II, 4
and 8).
V.—DISCOUNT AND LOAN RESTRICTIONS.

If trust companies are "corporations having banking
powers," then it is a misdemeanor for directors to vote
to make a loan whereby the total loans of the corporation
are made to exceed three times its paid-in capital, or to
make a loan to a director, or upon paper upon which
he is liable, to an amount exceeding one-third of the
paid-in capital (R. S., 1903, sec. 2545).
Trust companies have power to loan on "real estate
and collateral security." The notes and debentures issued
by any trust company must not exceed ten times the
paid-up capital, and they must not exceed the amount
of the first mortgages pledged to secure them (R. S., 1903,
sec. 1122).
VI.—INVESTMENTS.

Trust companies have power to buy and sell bonds of
Oklahoma, all other kinds of government, state, or
municipal bonds, all kinds of negotiable and nonnegotiable paper, "stocks, and other investment securities"
(R. S., 1903, sec. 1122). The directors of a trust company
have power to invest " the moneys placed in their charge "
in loans secured by real estate or other sufficient collateral, in United States or Oklahoma bonds, and in the
bonds of any State or municipality in, Oklahoma or in the
Indian Territory. Trust companies may hold only such
real estate as required in the transaction of their business
and such as they acquire in the enforcement of liabilities
due them (R. S., 1903, sec. 1125).




534

Oklahoma

— Trust

Companies

VII.—OVERDRAFTS.

The only provision relative to overdrafts is t h a t stated
under Banks, making every officer or employee of any
" b a n k i n g association" who knowingly overdraws his
account guilty of a misdemeanor (R. S., 1903, sec. 2550).
X.—UNAUTHORIZED BANKING.

See X, under Banks.
XI.—PENALTIES.

The penalties given under Banks are none of t h e m
framed in language inclusive of t r u s t companies, although
such a penalty as t h a t upon officers who advertise t h a t
deposits are guaranteed by the S t a t e of Oklahoma ought
t o be applicable t o the two sorts of institutions indiscriminately.
Under the trust company act officers or directors who
refuse to m a k e statements required of them, or make
false statements, are guilty of a misdemeanor, punishable by a fine not exceeding $500, imprisonment of
from one t o twelve months, or both (R. S., 1903, sec.
1126). If trust companies are "corporations engaged in
banking, broker, or deposit business" then any officer,
director, etc., of a trust company who receives deposits
with knowledge of the insolvency of the company is
guilty of a felony, punishable by imprisonment " i n the
territorial prison " for not less t h a n ten years, imprisonm e n t in t h e county jail for not more t h a n one year, fine of
not more t h a n $10,000, or both fine and imprisonment
(R. S., 1903, sec. 2551), (See also Revised Statutes, 1903,
section 2545, making it a misdemeanor for directors of
" a n y corporation having banking p o w e r s " t o vote loans
in excess of three times the capital paid in, or to vote a loan
t o a director exceeding one-third of the paid-in capital.)
X I I . — D E P O S I T O R S ' GUARANTY SYSTEM.

See X I I , under Banks.




535

OREGON.
The most recent revision of the statutes of Oregon, that
of 1902, by Bellinger and Cotton, contains only a few, and
those very unimportant, provisions with regard to banks.
The most important legislation on the topic is in chapter
138 of the laws of 1907, though chapters 148 and 265 of
the same year also contain banking provisions. The session
laws from 1902 through 1909 contain nothing that has been
thought worth incorporating in the digest. References in
the digest, where they are simply numbers in parenthesis,
are to sections of chapter 138 of 1907. There is no separate legislation for savings banks and trust companies,
but chapter 138 provides that "any person, firm, or corporation (except national banks) having a place of business
within this State where credits are opened by the deposit
or collection of money or currency or negotiable paper
subject to be paid or remitted upon draft, receipt, check, or
order shall be regarded as a bank or banker and as doing
a banking business under the provisions of this a c t " (7).
Moreover, section 8 specifically places savings banks under
the provisions of the act, and section 35 expressly makes
the word bank inclusive of the banking or savings department of any trust company that does a banking or savings
business. The provisions digested under " Banks," therefore, must be considered applicable to savings banks and
trust companies as well.




536

Oregon

—

S t a t e

Banks

BANKS.
I.—TERMS OF INCORPORATION.

Banking corporations m a y be formed t o do a banking
business, a savings banking business, or b o t h (8). Although not expressly authorized to do a trust-company
business, t h a t power m a y be inferred from t h e section
which, after limiting real-estate holdings, provides t h a t
these restrictions do not apply to real estate bought with
other funds t h a n t h e capital and resources nor to real
estate held in t r u s t (15). Trust companies m a y clearly do
a banking business, for t h e s t a t u t e provides t h a t they m a y
use the n a m e "trust c o m p a n y " without compliance with
t h e act if t h e y are not doing a banking business; besides,
companies which have any other d e p a r t m e n t t h a n a banking d e p a r t m e n t m u s t conduct it separately (9).
The requirement for capital declares t h a t it is unlawful
for any person, firm, or corporation t o transact a banking
business without " c a p i t a l stock as follows:" I n cities,
villages, and communities of 1,000 or less, $10,000; in
those of 1,000 to 2,000, $25,000; in cities of 2,000 t o 5,000,
$30,000; in cities of 5,000 and upward, $50,000 (8).
Presumably these requirements are for minimum capital.
At least 50 per cent of t h e capital m u s t be paid in before
business is begun; t h e remainder m u s t be paid in within
six months (10).
Dividends m a y be declared out of net profits, b u t before
they are declared not less t h a n one-tenth of t h e net profits
for t h e preceding dividend period m u s t be carried t o surplus until t h e surplus amounts to 20 per cent of t h e paid
capital (17).




537

N ational

Mon etary

II.—LIABILITIES

AND

DUTIES

Commission
OF

STOCKHOLDERS

AND

DIRECTORS.

There is no particular provision for stockholders' liability in banks.
Banking corporations must have not fewer t h a n three
directors (8), each of whom m u s t own at least $500 par
value of stock. A majority m u s t meet at least once every
three months and examine t h e affairs of t h e bank (16).
If t h e directors knowingly allow any officer, director, or
employee, or t h e state bank examiner or one of his employees, to borrow funds of their bank in an excessive or
dishonest manner, each director participating in the loan
is personally liable for all damage which any person sustains in consequence (22).
III.—SUPERVISION.

There is a board of bank commissioners composed of t h e
governor, t h e secretary of state, and t h e state treasurer,
who appoint a bank examiner for terms of four years.
T h e examiner m u s t have had a t least three years' practical experience in banking or have served for three years
in some state banking department. While in office he
m a y not have any interest in any banking business (1),
nor m a y any of his assistants (3). The examiner's salary
is $3,000 a year (5). The examiner and his assistants are
forbidden to disclose any information obtained in t h e performance of their duties except so far as t h e banking act
makes it incumbent upon t h e m to publish the information. Names of depositors and debtors, amounts of deposits and debts, must only be disclosed in t h e course of
d u t y (33). Banks or bankers m a y present charges against
t h e examiner t o t h e board of b a n k commissioners, who,
after a hearing, m a y remove him from office (41).




538

Oregon

—

S t a t e

Banks

The bank examiner approves of reserve depositaries (23).
If by canceling unpaid shares the capital of a bank is
reduced below the minimum and is not increased to the
required amount within thirty days, the bank's affairs
may be wound up (11). If upon examination or from a
report it appears that capital is reduced by impairment or
otherwise, the examiner requires the bank to make good
the deficiency. He may examine the bank later to see if
the deficiency has been made good; if it has not been, he
proceeds for a dissolution (29). These proceedings may
follow not only impairment of capital, but a finding by the
examiner from examination or report that a bank is insolvent or in a condition to render continuation of business
hazardous, or a finding that it has exceeded its powers or
failed to comply with law. The examiner reports to the
board of bank commissioners and may take immediate
possession of the bank's affairs. If the board, after inquiry
into the facts, consider it necessary in the interests of
creditors, etc., or if they believe the bank is in a condition
to render further business hazardous, or has exceeded its
powers, failed to comply with law, failed to submit to
examination and publish reports, or if they believe its
capital is impaired, they may report to the attorney-general, who thereupon proceeds in the name of the bank
examiner to cause the bank to discontinue business. A
receiver is appointed by court (30).
REPORTS.

Calls are made by the bank examiner for reports simultaneously with the issue of calls by the Comptroller of the
Currency for national-bank reports. The reports, in the
form prescribed by the examiner, show total resources
and liabilities on a past day specified by him, and must
be transmitted to him within ten days after receipt of
his request. Abstracts of them are published in a local




539

National

Monetary

Commission

newpaper (24). The examiner annually reports to the
board of bank commissioners, showing the published abstract of the last report of each bank, any other proceedings done by him, the condition of banking business in the
State, and the affairs of the examiner's office (25).
The examiner reports to the board deposits in any bank
which have not been added to or reduced for seven years.
The board prescribes how the examiner is to publish these
facts (42). The cashier or secretary of every institution
in which deposits of money are made returns every second
year to the secretary of state a statement of the amount
standing to the credit of every depositor who has not
deposited or withdrawn money for more than seven years,
showing also the last known address of the depositor and
the fact of his death, if known. The reporting officer
publishes these statements weekly for four weeks in a
local newspaper. Where the depositor is known to be
dead, the deposit need not be reported (1907, chap. 148, 1).
The secretary of state biennially reports these deposits to
the attorney-general, and they are treated as having
escheated to the State (1907, chap. 148, 2, amd. by 1909,
chap, 36).
(For reports required for purposes of taxation see 1907,
chapter 265, sections 2, 5, and 6, for reports from depositaries of public funds see chapter 135 of the laws of 1907.)
EXAMINATIONS.

At least once a year, and oftener if the examiner thinks
it necessary, he must without previous notice examine the
affairs of every bank (26). All examinations must be
personally conducted by the examiner (5). Incidental to
proceedings for a receivership may be an examination by
the examiner (29), and an " inquiry into the facts " by the
board of bank commissioners (30). A majority of the
directors of every bank at their meeting at least every




540

Oregon*

—

S t a t e

Banks

three months must examine all loans, paper, securities,
liabilities, and resources of the bank (16).
IV.—RESERVE REQUIREMENTS.

Every bank doing business in cities or towns of less than
50,000 must keep on hand in actual cash or balances due
from good solvent banks to be approved by the examiner
not less than 15 per cent of demand liabilities and 10 per
cent of time deposits. Every bank doing a business in
cities of over 50,000 must keep on hand in the same form
not less than 25 per cent of demand liabilities and 10 per
cent of time deposits. At least one-third of the reserve
percentages must be in cash (23).
V.—DISCOUNT AND LOAN RESTRICTIONS.

The total liability to any bank of any person, firm, or
corporation for money loaned, including in firm or company liabilities those of the members, must never exceed
25 per cent of paid-in capital and surplus, but the discount
of bills of exchange drawn in good faith against existing
values and the discount of paper owned by the persons
negotiating it, and loans secured by real estate, personal
property, warehouse receipts, etc., are not within this
limitation, if the loan does not exceed 75 per cent of the
value of the paper, warehouse receipts, or personal property, nor exceeds 50 per cent of the value of the real
estate, if that is given as security (20).
No officer, owner, or employee of a bank, nor the bank
examiner, nor any employee of his, is allowed to borrow
from the bank, whether he gives security or not, without
the approval of a majority of the directors or an executive
board or discounting committee chosen by a majority of
the directors (22).
No bank may take its own capital stock as collateral
except when necessary to prevent loss on a previous debt,




541

National

Monetary

Commission

in which case t h e stock must be sold within twelve
m o n t h s (13).
VT.—INVESTMENTS.

Real estate m a y be held only as follows: Such as is necessary for t h e transaction of t h e b a n k ' s business, including
banking offices and certain premises in t h e same building
which m a y be rented, b u t this investment must not exceed
50 per cent of capital, surplus, and undivided profits; such
real estate as is taken b y the b a n k in satisfaction of previous debts; such real estate as the b a n k purchases a t
sale under decrees or foreclosures under securities held b y
it. Except for t h e first sort of real estate, none m a y b e
held for longer t h a n five years; if not t h e n sold, it m a y
not be carried as an asset (15). The lots on which t h e
banking building is situated m u s t be unincumbered (8).
No b a n k m a y purchase its own stock except when necessary to prevent loss on a previous debt, in which case
t h e stock m u s t be sold within six months (13).
VIII.—BRANCHES.

Every b a n k with one or more offices in Oregon m u s t
maintain at every office a capital not less t h a n t h a t
required for t h e organization of separate banks (35).
X.—UNAUTHORIZED BANKING.

Except national banks, no person, firm, or corporation
m a y carry on a banking business except on compliance
with t h e act of 1907, nor may, without compliance
with it, use t h e terms " b a n k , " " b a n k e r , " " b a n k e r s , "
" banking house," or " trust company." Trust companies
which do not do a banking business m a y use t h e t e r m
" t r u s t c o m p a n y " without compliance with t h e banking
statutes. Any person, firm, or corporation t h a t violates




54 2

Oregon

—

S t a t e

Banks

these provisions after t h i r t y days' notice from the examiner is guilty of a misdemeanor, punishable b y fine of
from $20 to $100 a day (9). I t is forbidden to advertise
in any way greater capital, surplus, or undivided profits
t h a n are maintained (35).
XI.—PENALTIES.

Owners or officers of any b a n k who receive deposits
with knowledge of the bank's insolvency are guilty of a
felony punishable b y fine of not more t h a n $1,000, imprisonment not exceeding two years, or both (18). Owners,
officers, and employees who certify to checks for which
there is not t h e required a m o u n t to the credit of the
drawer are guilty of a misdemeanor, punishable by fine
not to exceed $1,000 (21). Failure t o furnish and publish
t h e reports to t h e examiner is punishable by fine upon the
owners and officers of t h e offending b a n k of $50 a day (24).
Failure by t h e cashier or secretary t o report d o r m a n t
deposits to t h e secretary of state is punishable by fine of
from $50 to $1,000, imprisonment of from ten to ninety
days, or b o t h (1907, chap. 148, 3). Officers, owners, or
employees who misrepresent the condition of their bank
to the examiner are punished by fine of $1,000, imprisonment for not less t h a n six months, or both (27).
If the examiner proceeds maliciously or without reasonable cause against a bank for insolvency, impairment of
capital, etc., he is not only liable on his bond for damages
resulting, b u t guilty of a felony punishable by a fine of not
less t h a n $1,000, imprisonment for not more t h a n two
years, or both (30). If the examiner or his assistant
discloses information outside his d u t y he is punished by
a fine of $1,000, imprisonment for not less t h a n six months,
or b o t h , he also loses his office (33).




543

National

Monetary

Commission

SAVINGS BANKS.
See preliminary paragraph under this State. Savings
banks are subject to all the provisions of the act of 1907
(7). Savings banking and regular banking business may
be combined (8).
TRUST COMPANIES.
Trust companies, if they have a place of business
"where credits are opened by deposit or collection of
money or currency or negotiable paper subject to be
paid or remitted upon draft, receipt, check, or order"
are subject to all the provisions of the act of 1907 (7).
They may call themselves "trust companies" without
being subject to the act only if they do no banking business (9). There is a provision in section 9 which, though
not wholly clear in its application, seems to mean that
trust companies must keep their trust department distinct from their banking or savings banking department.
After forbidding the use of certain words except upon
compliance with the act, and prescribing that trust companies may call themselves by that name without compliance with the act if they do not do a banking business,
the section goes on. "No assets, funds, properties, or
investments of any other department shall be included in
any statement of such banking or savings department as
herein defined, and all such capital, assets, funds, properties, and investments of such banking or savings department shall be kept separate and distinct from all other
capital, assets, funds, properties, and investments of such
company." See also the provision of section 35, which
provides that the word bank in the statute is to include
the banking or savings department of any trust company
doing a banking or savings business.




544

PENNSYLVANIA.
The condition of the statutes of this State makes it particularly difficult to determine just what the law is on
many particular points. Instead of being reenacted in the
form of revised laws they have been collected from time
to time in various editions of Purdon's Digest, where it is
often hard for the reader to tell what has been repealed
and what is still in force. The banking statutes are
reprinted in convenient form in a reprint compiled under
an act of assembly, by direction of the commissioner of
banking, by William Brown, jr., and Charles L. Brown, of
the Philadelphia bar. The digest is based on this reprint,
which includes legislation up to 1907; for later laws, the
digest is based on a pamphlet edition, issued by the
banking department, of those acts of 1907 which relate to
banking, and on the published statutes of 1909. There
must be considerable doubt what the law is on many
points; these places are indicated, and the ambiguous language is quoted. The two most important statutes are
the banking act of 1850 and the banking act of 1876.
These two and their amendments are digested under
" Banks;" they seem not to apply to other classes of banking institutions. Mr. John W. Morrison, deputy commissioner of banking in Pennsylvania, states that the act of
1850 is now obsolete. Since it has never been repealed,
however, it is included in the digest, but, together with
other statutes which Mr. Morrison declares to be obsolete,
is, when inserted, inclosed in brackets. Citations in the
digest follow the citations in the reprint above referred to.
S. D o c 353, 61-2




35

545

National

M o n et ar y

Commission

BANKS.
I.—TERMS OF INCORPORATION.

It is a constitutional provision that no corporation " t o
possess banking and discounting privileges" may be
organized without three months' public notice at the place
it is intended to be located, and that no charter may be
granted for longer than twenty years (Const., art. 16,
sec. I I . )
No corporation may be organized under the act of 1876
with a less capital than $50,000 if its principal place of
business is in a town of more than 5,000, nor with a less
capital than $25,000 if its principal place of business is in
a town of less than 5,000. Shares must be of not less than
$50 each (act 13th May, 1876, sec. 5, P. L., 161, amd. by
act 3d May, 1909, No. 230). Banks having capital divided
into shares of more than $50 each may reduce the par
value of each share, but not so as to make it under $50
(act 14th June, 1879, s e c - x> P- L-, 94)- At least 50 per
cent of the stock of any association incorporated under the
act of 1876 must be paid in before business is begun, and
the remainder in installments of at least 10 per cent of the
whole capital every month (act 13th May, 1876, sec. 9,
P. L., 161). A statute in 1883 provided that whenever a
banking company had a capital subscribed of which not
all had been paid in, and certificates had been issued for
unpaid stock, the company could decrease its capital to
the amount paid in, but must not decrease its capital to
less than $200,000 (act 22d June, 1883, sec. 2, P. L-, 155).
[The act of 1850 provided a system of voting whereby
each share, not exceeding two, entitled the holder to one
vote; each two shares above two not exceeding ten
entitled him to one vote; each four shares above ten not




546

Pennsylvania

—

State

Banks

exceeding thirty, one vote; every ten shares above t h i r t y
not exceeding fifty, one vote; above fifty, additional shares
conferred no right to vote whatever. Under this act also
shares h a d to be held three months before t h e election to
be voted on (act 16th April, 1850, sec. 10, art. 4, P. L., 477).
This was altered with respect to " t h e banks of this Commonwealth " so t h a t every share not exceeding ten entitled
the holder to one vote; every two shares from ten to
twenty, one vote; every five shares from t h i r t y to one
hundred, one v o t e ; and every ten shares above one hundred, one vote (act 17th April, i 8 6 i , s e c . 2, P . L., 342).]
The act of 1876 provides t h a t " i n all elections for directors
and otherwise" every shareholder is entitled to one vote
on each share of stock he holds (act 13th May, 1876, sec.
14, P . L., 161).
[By t h e act of 1850 dividends m u s t be declared a t least
twice a year on the first Tuesday of May and November,
payable within ten days thereafter; these dividends m u s t
not exceed net profits, nor m a y they impair capital (act
16th April, 1850, sec. 10, art. 12, P. L., 477).] Under t h e
act of 1876 directors of corporations m a y declare quart e r l y or semiannual dividends out of net profits, payable
within fifteen days after the declaration; before declaring
a dividend, however, each corporation must carry " a t
least one-tenth of net profits for t h e preceding quarter,
if it is a quarterly dividend, and at least one-tenth of t h e
net profits of t h e preceding half year, to its s u r p l u s "
until t h e surplus amounts to 25 per cent of capital (act
13th May, 1876, sec. 16, P . L., 161). Capital must not
be withdrawn, and dividends m a y be declared only out
of net profits (act 13th May, 1876, sec. 24, P. L., 161).
(For liabilities which a bank is allowed to incur see
V, infra)




547

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Monetary

II.—LIABILITIES

AND

DUTIES

Commission
OF

STOCKHOLDERS

AND

DIRECTORS.

There was an act passed in 1874 which made stockholders in ' ' b a n k s , banking companies, saving-fund institutions, trust companies, and all other incorporated companies doing t h e business of banks, or loaning and discounting moneys as such," personally liable for debts a n d
deposits t o double t h e amount of t h e capital held b y each
(act n t h May, 1874, sec. 1, P . L., 135). Under t h e act
of 1876 also, t h e shareholders of " a n y corporation formed
under this a c t " are individually liable for " a l l contracts,
debts, and e n g a g e m e n t s " of t h e corporation u p to t h e
a m o u n t of their stock at par in addition to the par value
of t h e shares (act 13th May, 1876, sec. 5, P. L., 161).
For corporations organized under t h e act of 1876 there
m u s t be not less t h a n five directors, all citizens of t h e
United States and of Pennsylvania, and each t h e holder
of at least ten shares of the capital of the corporation.
One director must be president and another vice-president,
b u t cashiers, clerks, and tellers are ineligible (act 13th
May, 1876, sec. 12, P . L., 161). Under t h e same s t a t u t e ,
if directors of corporations make dividends which
impair capital, those who consent are liable individually
t o t h e corporation for t h e stock divided (act 13th May,
1876, sec. 16, P. L., 161). A s t a t u t e of 1901, applicable
apparently t o all corporations, allows the stockholders t o
fix the number of directors as they choose, except t h a t
there m u s t be not fewer t h a n three (act 19th April, 1901,
P. L., 80).
[Earlier legislation with regard t o directors is briefly as
follows: No judge or person holding office under t h e
S t a t e in t h e treasury department, or in land offices, etc.,
m a y be director of a b a n k (act 27th J a n u a r y , 1819, sec.
3, 7 Sm. L., 148). Bank directors under an act passed




548

Pennsylvania

—

State

Banks

in 1843 were eligible three years out of any four, b u t no
person was allowed to be a director of more t h a n one
b a n k a t t h e same time (act 18th April, 1843, sec. 8,
P . Iy., 309). The act of 1850 required t h e affairs of every
b a n k t o be conducted b y thirteen directors, all citizens
of t h e United States and stockholders of t h e b a n k ; it
forbade any one to be directors in two banks and forbade
the governor and certain public officers to be directors
(act 16th April, 1850, sec. 10, P . T., 477). I t was later
enacted t h a t t h e number of directors should not be less
t h a n five nor more t h a n thirteen (act 17th April, 1861,
sec. 1, P . L., 341). The act of 1850 again provided t h a t
directors should only be eligible for three years out of
any four except t h e president (act 16th April, 1850, sec.
10, art. 2, P . L., 477). The same act forbade directors,
except t h e president (extended to include vice-president,
act 13th April, 1859, sec. 1, P . L., 613) to t a k e any p a y
unless granted in stockholders' meeting (act 16th April,
1850, sec. 10, art. 6, P. L., 477). The same act required
a general meeting of stockholders annually, at which time
the directors must m a k e a statement of the affairs of
the bank (act 16th April, 1850, sec. 10, art. 9, P. I,., 477).
The same act made directors who declared dividends
which impaired capital liable to the corporation for the
capital divided (act 16th April, 1850, sec. 10, art. 12,
P . L., 477). The same act provided t h a t , in insolvency
occasioned b y fraud of t h e directors, those implicated in
t h e fraud should be liable to stockholders and creditors
for proportionate shares of losses (act 16th April, 1850,
sec. 40, P. Iy., 477).] Another act provided t h a t whenever " a n y bank, now or t h a t m a y hereafter be incorporated under any law of this Common w e a l t h ' ' should
be declared fraudulently insolvent, t h e assignees of the
b a n k should sue those who were officers and directors at
the time of t h e assignment and those who had previously




549

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Monetary

Commission

been officers and directors by whose act t h e insolvency
h a d been caused, to get judgment for a sum equal t o t h e
outstanding paper issues and certificates of deposit of t h e
bank (act 12th April, 1867, sec. 1, P. L., 71).
III.—SUPERVISION.

An act passed in 1895 covers most of t h e points under
supervision. I t establishes a banking d e p a r t m e n t at t h e
head of which is t h e commissioner, who is to take care t h a t
the laws of t h e State in relation'to banks, t r u s t companies,
savings banks, cooperative banking associations, surety
companies, building and loan associations, etc., are being
executed (act 1 i t h February, 1895, sec. 1, P . L., 4). Unincorporated bankers are p u t under the supervision of t h e
commissioner by act 7th June, 1907, P . L., 461. T h e
commissioner is appointed for a term of four years with a
salary of $6,000. Neither he nor his subordinate m a y be
interested in any corporation subject to their supervision,
nor m a y they divulge information acquired in d e p a r t m e n t
work (act n t h February, 1895, sees. 2 and 16, P. Iy., 4).
Whenever it appears from a report, or the commissioner
has reason to believe, t h a t the capital of any corporation
subject to the supervision of the d e p a r t m e n t is reduced
below t h e legal amount, or below the a m o u n t certified as
being paid in, t h e commissioner requires the deficiency to
be m a d e good; and if t h e corporation fails for sixty days to
m a k e the impairment good t h e commissioner communicates
t h e facts to t h e attorney-general, who proceeds in court for
a dissolution (act n t h February, 1895, sec. 6, P . L., 4). I n
case any corporation refuses to submit its affairs t o examination or is found to have violated any law of the S t a t e , t h e
commissioner proceeds through t h e attorney-general as
before (act n t h February, 1895, sec. 8, P. L., 4). If from
an examination t h e commissioner has reason to believe
t h a t a corporation is in an unsound condition or is doing




550

Pennsylvania

—

State

Banks

business contrary to public interests, or if for t h i r t y days
after his notification reserves are not m a d e good (act 8th
May, 1907, P. L., 189), t h e commissioner proceeds through
t h e attorney-general for a receiver; if t h e commissioner
thinks it immediately necessary he may, after a hearing
before t h e attorney-general, appoint a temporary receiver
(act n t h February, 1895, sec. 9, P. L., 4). When a receiver is appointed, on motion of t h e attorney-general, at
t h e instance of t h e commissioner of banking, of t h e assets
of any corporation, any previously appointed receiver
m u s t t u r n over possession to t h e one t h u s appointed (act
23d April, 1909, No. 117).
The following provisions were law before t h e act of 1895.
If they continue in force it is with t h e commissioner in
place of t h e auditor-general; t h e act of 1895 provides for
substitution (act n t h February, 1895, s e c - IO> P- L., 4).
When the auditor-general has notified a corporation subject to t h e act of 1876 t h a t it has committed an act of
insolvency, he appoints a special agent to make inquiry; if
this verifies the auditor's belief, t h e auditor applies to a
court for a receiver (act 13th May, 1876, sec. 27, P . L., 161).
Acts of insolvency under the s t a t u t e of 1876 are defined in
sections n and 26. [Under the act of 1850 t h e auditorgeneral could require certain returns from banks and when
it appeared from a return t h a t t h e limit of liabilities set by
t h e act of 1850 had been violated, he could give notice to
t h e governor, who would thereupon declare t h e charter
of t h e b a n k forfeited (act 16th April, 1850, sec. 18, P . L.,
477). Under t h e same act failure to redeem all obligations, notes, certificates of deposit, etc., in gold or silver
coin was ground for requiring a general assignment and
dissolving t h e b a n k (act 16th April, 1850, sec. 27, P . I,.,
477). Under t h e act of 1850 also t h e maintenance of a
branch, without express authority from t h e legislature,




551

National

Monetary

Commission

was ground for loss of charter (act 16th April, 1850, sec.
50, P . L., 477)-]
Under late legislation, t h e commissioner of banking
approves of reserve depositaries (act 8th May, 1907,
P . L,., 189), and performs certain duties with respect to
selecting s t a t e depositaries (act 17th February, 1906, sec. 1,

P.L.,45).
REPORTS.

The prevailing s t a t u t e on this subject provides t h a t
every corporation subject to the supervision of t h e banking department, makes to the commissioner not fewer
t h a n two reports of its condition each year in t h e form
prescribed by him stating resources and liabilities on a
past day specified by the commissioner; t h e report is
transmitted t o him within five days after t h e receipt of
his request a n d an abstract of it is published in a local
newspaper. The commissioner m a y call for special reports. This s t a t u t e of 1895 enacts t h a t t h e reports
required by it are in lieu of all reports required by earlier
laws (act n t h February, 1895, sec. 5, P. T., 4). In t h e
same act it is provided t h a t the commissioner makes an
annual report to the governor setting forth t h e condition of all corporations reporting to him; a s t a t e m e n t of
t h e corporations under the supervision of t h e d e p a r t m e n t
whose business has been closed during t h e year; suggestions for amending t h e s t a t u t e s ; and details of departm e n t administration (act n t h February, 1895, sec. 12,
P . L,., 4). A late s t a t u t e requires banks, savings b a n k s ,
and trust companies to give with especial completeness
in their reports to t h e commissioner their liabilities, t o
depositors, etc., and for money borrowed (act 12th June,
1907, P . L., 5 2 5).
The following provisions of earlier laws deal with reports (if they are still law, it is with t h e commissioner sub-




552

Pennsylvania

—

State

Banks

stituted for t h e auditor in all m a t t e r s except t a x a t i o n act n t h February, 1895, sec. 10, P. L., 4 ) : One s t a t u t e
required banks, savings institutions, and other corporations t o publish in a local newspaper once a year, a statement of dividends over $5, unclaimed for three years,
setting forth t h e names and residences of t h e persons
entitled to t h e dividends and their amounts (act 6th
March, 1847, sees. 1 and 3, P . L., 222). Banks, together
with all corporations receiving deposits of money, must
publish annually names, residences, dates of deposits,
and balances of depositors who have not dealt with their
deposits for three years, and are now due over $10 (act
6th March, 1847, sees. 2 and 3, P. L., 222). [Under t h e
act of 1850, t h e cashier of each b a n k was required to forward t h e auditor annually a list of persons who had not
dealt with their deposits or dividends for three years (act
16th April, 1850, sec. 52, P. L., 477), and directors were
required to m a k e a statement annually to stockholders
(act 16th April, 1850, sec. 10, art. 9, P. L., 477). Under
t h e act of 1850 t h e auditor required the cashiers of banks
to make quarterly returns of the affairs of their banks,
which returns he tabulated for the legislature (act 16th
April, 1850, sees, n , 12, 13, 14, and 18, P. Iy., 477). Under
the same s t a t u t e a bank making an assignment was
required to report to a local court a full statement of its
affairs containing certain specified items (act 16th April,
1850, sec. 42, P. L., 477).] The act of 1876 requires t h e
directors of corporations subject to it to keep a list of
names and residences of stockholders, with t h e number
of shares held b y each, which list m u s t be sent annually
to t h e auditor-general (act 13th May, 1876, sec. 15,
P . L-, 161). The same s t a t u t e requires the cashier of every
b a n k to m a k e a full statement of t h e condition of t h e
corporation on t h e day previous to the declaration of
each dividend setting forth amount of capital paid in,




553

National

M o n e t ar y

Commission

balances due to other banks, a m o u n t due t o depositors,
total of debts and greatest a m o u n t of debts since last
previous statement, a m o u n t of paper, coin, etc., on hand,
value of realty and personalty held, a m o u n t of undivided
profits, liabilities to the corporation of directors and
officers, and a m o u n t of liabilities t o the corporation of
stockholders (act 13th May, 1876, sec. 17, P . Iy., 161).
T h e same s t a t u t e requires t h e cashier of every corporation subject t o it t o publish every six months in a local
newspaper a statement of t h e corporation's condition,
setting forth total assets and total liabilities (act 13th
May, 1876, sec. 22, P . L. 161), and requires publication
of a notice in voluntary dissolution (act 13th May, 1876,
sec. 25, P. L-, 161). Reductions of capital stock m u s t
also be published (act 22d June, 1883, sec. 2, P. L., 155).
An act passed in 1897 requires every bank to report
certain facts to t h e auditor-general for purposes of t a x a tion (act 15th July, 1897, sec. 1, P. Iy., 292).
(For reports of private bankers, see act 7th J u n e , 1907,
sec. 1, P . L., 559)EXAMINATIONS.

These are covered by an amendment to the act of 1895,
passed in 1901, clearly the last s t a t u t e on the subject;
it provides t h a t t h e commissioner m u s t examine or cause
to be examined, as often as he deems proper, t h e affairs
of every corporation subject t o his supervision (act 29th
May, 1901, sec. 1, P. L-, 345). The papers, funds, etc., of
banks are at all times subject to the inspection of their
directors, and t h e minutes, etc., are subject to t h e inspection of any committee of the legislature (act 16th April,
1850, sec. 10, Art. 15, P . L-, 477, and act 13th May, 1876,
sec. 19, P. L., 161). [The act of 1850 provided t h a t in
insolvency t h e court should appoint auditors to m a k e a
strict investigation of t h e affairs of t h e b a n k to verify t h e




554

Pennsylvania

— State

Banks

report made b y directors (act 16th April, 1850, sec. 43,
P . L., 477).] Under t h e act of 1876 an examination m u s t
be made immediately upon the commission of an act of
insolvency (act 8th May, 1907, P. L. 189).
IV.—RESERVE

REQUIREMENTS.

Banks, savings banks, and trust companies which receive deposits are subject to t h e following rules for
reserves: (1) Every corporation receiving money subject
to be paid out on demand must have a reserve equal to
a t least 15 per cent of demand liabilities. The whole
fund may, and at least one-third of it must, consist of
lawful money of t h e United States, gold certificates, silver
certificates, national-bank notes, or clearing-house certificates representing specie or lawful money deposited
for t h e purpose. One-third or less m a y consist of United
States bonds, Pennsylvania bonds, bonds of Pennsylvania
municipalities, a n d bonds which are a legal investment for
savings banks. The rest of t h e reserve fund above the
cash and bonds above stated m a y consist of moneys on
deposit subject to call in any Pennsylvania bank or trust
company approved by t h e commissioner, or in any bank
or trust company located in a city which is under United
States s t a t u t e a reserve city and approved by t h e commissioner. (2) Every bank, savings bank, or trust company receiving deposits payable at a future time m u s t
keep a reserve equal to 7J per cent of time deposits. The
fund m a y consist in p a r t of cash and clearing-house certificates as described above, and in part of the bonds
described above; or it m a y consist of money on deposit
subject to call in t h e banks and trust companies specified
above. Not more t h a n one-third of this reserve fund m a y
consist of bonds, however. (3) If t h e reserve falls below
t h e a m o u n t required, t h e corporation m u s t not increase
its liabilities or purchase anything except sight exchange;




555

National

Monetary

Commission

it must not declare dividends. The commissioner notifies
a bank whose reserve funds are below the requirement
(act 8th May, 1907, P. L., 189).
V.—DISCOUNT AND LOAN RESTRICTIONS.

The latest provisions on this topic are those enacted
in 1901: No director of "any banking institution, trust
company, or savings institution having capital stock''
may receive as a loan any amount greater than 10 per
cent of the paid-in capital and surplus, and the gross
amount loaned to officers and directors and to firms
in which they are interested must not exceed at any
time 25 per cent of the paid-in capital and surplus (act
14th June, 1901, sec. 1, P. L., 561, and act 13th May, 1876,
sec. 21, P. L., 161). None of the above-named corporations may take as security for a loan or discount a lien
on any part of its capital stock; the same surety must
be required of shareholders as of those not shareholders
(act 14th June, 1901, sec. 2, P. L., 561). "Banks chartered under the provisions of the laws of the Commonwealth" are authorized to lend on the security of bonds
and mortgages on unincumbered real estate in Pennsylvania not in excess of their time deposits and to invest
their funds, not exceeding 25 per cent of capital, surplus,
and undivided profits, in the purchase of such mortgages
(act 10th July, 1901, sec. 1, P. L., 639).
Previous to this legislation the topic of loans was dealt
with in the act of 1876 in the following provisions: All
associations incorporated under the act have power to
hold as collateral real or personal estate, including securities of the United States, individuals, or corporations;
interest may be paid on deposits only of correspondents
outside Pennsylvania (act 13th May, 1876, sec. 7, P. L.,
161). No directors of any corporation under the act of
1876 may receive as a loan an amount greater than 10




556

Pennsylvania

—

State

Banks

per cent of t h e paid-in capital, and t h e gross a m o u n t
loaned to all officers and directors, or firms in which
they are interested, must not exceed 25 per cent of t h e
paid-in capital (act 13th May, 1876, sec. 21, P . L., 161).
No corporation under t h a t act is allowed to t a k e as
security a lien on any p a r t of its capital; the same security
is required of shareholders as of those not shareholders
(act 13th May, 1876, sec. 23, P . L., 161).
[Earlier legislation included t h e following provisions:
Certain banking companies were in an act of 1824 required
to loan one-fifth of their capital to t h e farmers, mechanics,
and manufacturers of the district in which each bank
was established, if proper applicants were found, and
they were required whenever the legislature applied to
lend n o t exceeding 5 per cent of their paid-in capital t o the
State (act 25th March, 1824, sec. 8, 8 Sm. L., 236). The
banks of t h e Commonwealth under an act of 1829 were
authorized t o negotiate loans to or to purchase t h e stock
of this Commonwealth not in excess of one-third of the
capital stock of t h e corporation. I t was provided t h a t
nothing in t h e act should authorize " s u c h purchases of
any individual or corporation, except such as shall be
taken in satisfaction of debts previously c o n t r a c t e d ' '
(act 23d April, 1829, sec. 1, P. L., 3601). Some years
later banks were authorized " t o offer for and subscribe
to the whole or p a r t of any loan or loans to this Commonwealth " (act 14th April, 1835, sec. 1, P. L., 439).
The s t a t u t e of 1850 forbade any director of a bank t o
appear as drawer or indorser for an a m o u n t greater t h a n
3 per cent of t h e paid-in capital stock; t h e gross a m o u n t
discounted for or loaned to all directors and officers and
t o t h e firms in which they were interested was not allowed
t o exceed 6 per cent of paid-in capital. Actual business
paper bona fide drawn by directors in t h e course of their
private business and later presented by t h e holders for




557

National

Monetary

Commission

discount are not within this prohibition, however (act
16th April, 1850, sees. 23 and 51, P . L., 477). A later
s t a t u t e provided t h a t no director of a b a n k should borrow of t h e bank a greater a m o u n t a t any one time t h a n
5 per cent of t h e paid-in capital; t h e gross a m o u n t loaned
t o all directors and officers and to firms in which they
were interested was forbidden to exceed 6 per cent on
t h e paid-in capital stock (act 17th April, 1861, sec. 1,
P . L., 341).
There has been t h e following legislation on liabilities
allowed b a n k s : By t h e act of 1850 the total liabilities
of any bank, exclusive of capital, were forbidden t o
exceed three times t h e paid-in capital; t h e debts of any
kind were forbidden to a m o u n t to more t h a n four times
t h e capital stock paid in (act 16th April, 1850, sec. 17,
P . L., 477). A similar later s t a t u t e forbids t h e total
liabilities of any bank, exclusive of its capital, t o exceed
three times t h e a m o u n t of t h e paid-in capital, except
t h a t when t h e deposits exceed one-fourth of t h e capital
t h e excess m a y not be counted as a liability for this
prohibition; debts due and to become due to a b a n k are
forbidden ever t o amount to more t h a n four times t h e
paid-in capital., loans to t h e S t a t e excepted (act 22d
April, 1854, sec. 1, P. L., 467).]
VI.—INVESTMENTS.

The latest legislation on this topic was in 1901. T h e
section of t h e act of 1876 providing for holdings of real
estate was then amended to m a k e it lawful for any association incorporated under t h e act of 1876 t o hold such
real estate as is necessary for its accommodation in business; such as is mortgaged t o it; such as it purchases a t
sales under judgments, decrees, or mortgages held by t h e
corporation or purchases to secure debts due it. E x c e p t
for t h a t required for its business, no b a n k is allowed t o hold




558

Pennsylvania

—

State

Banks

real estate longer than five years (act 19th April, 1901, sec'
1, P. Iy., 79). Another act of the same year allows the
improvement of real estate held by a bank, erection of any
buildings, etc., of which portions may be rented. This
statute forbids a bank to reduce its surplus for this purpose
below 50 per cent of what its amount was when the
improvements were begun (act 21st May, 1901, sec. 1, P. L.,
288). No bank, trust company, or savings institution
having capital stock may hold its own capital unless
the purchase is necessary to prevent loss on a previous
debt contracted on surety thought adequate at the time,
or unless stock is forfeited for nonpayment of installments. Stock so purchased must not be held for longer
than six months if it can be sold for what it cost the corporation (act 14th June, 1901, sec. 2, P. L., 561). Banks
may invest their funds not exceeding 25 per cent of their
capital, surplus, and undivided profits in the purchase of
mortgages on unincumbered Pennsylvania real estate, and
they may purchase for investment any interest-bearing
bonds or other obligations of any corporation or individual
(act 10th July, 1901, sec. 1, P. L-, 639).
A statute of 1861 provided that banks might "hold for
more than five years property taken or received by assignment, execution, or otherwise in payment of debts to said
banks" (act 17th April, 1861, sec. 2, P. L., 342).
(For provisions for investments in the act of 1850 see act
16th April, 1850, sec. 10, art. 13, P. L., 477-)
It is a constitutional provision that no corporation shall
engage in any business except that authorized in its charter, nor hold real estate except what is necessary and proper
for its business (constitution, art. 16, sec. 6).
[An act of 1829 authorized banks to loan to the State
and buy stock of the State, but forbade banks to make
"such purchases of any individual or corporation, except
such as shall be taken in satisfaction of debts previously




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Monetary

Commission

contracted * * * provided t h e a m o u n t of such loans
m a d e or stock so held shall not exceed one-third p a r t of t h e
actual capital stock of such bank or corporation (act 23d
April, 1829, sec. 1, P. L.> 360).]
VIII.—BRANCHES.

[The act of 1850 provided t h a t every b a n k was forbidden
t o maintain in any way a branch or agency without t h e
express authority of an act of legislature (act 16th April,
1850, sec. 50, P . L., 477).] The act of 1876 provides t h a t
" t h e usual business * * * be transacted at an office
or banking house in t h e place specified " (act 13th May,
1876, sec. 6, P . L., 161).
X.—UNAUTHORIZED BANKING.

There is an old s t a t u t e providing t h a t no company incorporated by t h e laws of any other S t a t e t h a n Pennsylvania
m a y establish in Pennsylvania " a n y banking house or
office of discount and deposit," under penalty of a $2,000
forfeit on every person concerned (act 28th March, 1808,
sec. 1, 4 S m . L., 537)A 1909 statute, restricting t h e use of " t r u s t " t o corporations under the supervision of the banking d e p a r t m e n t ,
allows individuals t o act in a t r u s t capacity as they could
before the act. I t then proceeds: " N o t h i n g in this act
shall be deemed t o authorize any person, copartnership,
* * * or corporation, except such as report and are
under the supervision of the commissioner of banking
* * * to solicit or receive deposits" (act 226. April,
1909, No. 75).
XL—PENALTIES.

Every director, officer, agent, etc., of a b a n k or t r u s t
company who makes a false statement, entry, etc., or
exhibits false papers t o deceive an examiner or makes a




560

Pennsylvania

—

State

Banks

false report is guilty of a misdemeanor punishable by fine
not to exceed $1,000, imprisonment not to exceed two
years, or both (act 8th May, 1907, P. h-, 180). (See for previous legislation act 1st May, 1861, sec. 36, P. L-, 342.)
Any officer, clerk, employee, etc., of a bank, savings bank,
or trust company, who embezzles, or who puts forth a certificate of deposit, draws an order or bill of exchange, etc.,
or makes a false entry in a book or report, with intent to
defraud or to deceive an officer of the institution or a
bank examiner, and any person aiding in the commission
of one of these offenses, is guilty of a misdemeanor, punishable by fine of $500 to $5,000, or imprisonment for from six
months to five years, or both (act 23d April, 1909, No. 119).
The act which requires reports by banks, savings banks,
and trust companies to include with especial completeness
all liabilities, provides for a penalty in case of violation of
fine not over $1,000, imprisonment not over one year, or
both (act 12th June, 1907, P. L., 525). If the commissioner or a subordinate discloses information had in the
course of department business, except as authorized by the
statute, he is guilty of a misdemeanor punishable by a
$1,000 fine and dismissal from his employment (act n t h
February, 1895, sec. 16, P. L,., 4). Banks, savings banks,
and trust companies which fail to report are subject, at the
discretion of the commissioner, to a penalty of $20 a day
(act n t h February, 1895, s e c - 5> p - k., 4)Any person who circulates a false report derogatory to
the financial condition of a bank, trust company, or other
financial institution, or who aids another in so doing, is
guilty of a misdemeanor, punishable by fine of not more
than $5,000 and imprisonment for not more than five
years (act 23d April, 1909, No. 121).
Several statutes on receipt of deposits during insolvency
culminate in one which declares any officer of a bank, savings bank, or trust company who receives money from a
S. Doc. 353, 61-2




36

561

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Monetary

Commission

depositor with knowledge that the bank is insolvent guilty
of embezzlement punishable by a fine of double the amount
received and imprisoned from one to three years (act 9th
May, 1889, sec. 1, P. L., 145).
(For the enumeration of certain misdemeanors by officers of corporations, among which banks are mentioned—
mutilation of books, false statements, etc.—and for the
punishment of these misdemeanors, see act 12th June,
1878, sees. 3, 4, and 5, P. L., 196.)
[Under the old legislation forbidding directors to hold
office for more than three years out of four, the director
who violated the statute was fined from $500 to $2,000
and was thereafter ineligible to be a director of any Pennsylvania bank (act 18th April, 1843, sec. 8, R. L., 309).
The president, director, or officer of any bank who violated
the provisions of the act of 1850 when no particular punishment was provided was guilty of a misdemeanor punishable by fine not to exceed $1,000 and imprisonment
not to exceed three years (act 16th April, 1850, sec. 16,
P.L.,477).]
Corporations of all sorts which fail to publish dividends
unclaimed for three years, and deposit-receiving corporations which fail to publish deposits unclaimed for three
years, and the cashiers and treasurers of those corporations, are liable to the person in whose name the unclaimed
sum stands, or that person's representative, for the money
and 12 per cent interest (act 6th March, 1847, sec. 3, P. I,.,
222).

[Under the act of 1850 illegal branches forfeited the
charter of the bank establishing them and entailed as an
additional penalty the payment of quadruple taxes (act
16th April, 1850, sec. 50, P. L., 477).]




562

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— Savings

Banks

SAVINGS BANKS.
I.—TERMS OF INCORPORATION.

The constitutional provision that no corporation " t o
possess banking and discounting privileges" may be
organized without three months' public notice applies, no
doubt, to savings banks (constitution, art. 16, sec. n ) .
Savings banks formerly existed in Pennsylvania both
with and without capital stock (act"i7th April, 1872, sees.
1 and 4, P. L., 62).
Under an act passed in 1883, no savings bank with
a capital stock might decrease its capital to less than
$50,000 (act 22d June, 1883, sec. 2, P. L., 155). Savings
banks with a capital stock might decrease the par value of
shares to $50 (act 14th June, 1879, sec. 1, P. L., 94).
The most recent statute on these questions, however,
contemplates savings institutions conducted for the benefit not of stockholders, but of depositors. Two-thirds
of the incorporators must reside in the county where the
corporation is to be located (act 20th May, 1889, sec. 1,
P. L., 246). The auditor-general (see act n t h February,
1895, sec. 10, P. L., 4, which puts all the auditor's duties on
the commissioner of banking), before allowing the incorporation, ascertains whether greater convenience of access
to savings banks will be afforded to a considerable number
of depositors by opening the proposed bank, whether the
density of population in the neighborhood promises
adequate support, and whether the incorporators are responsible and fitted (act 20th May, 1889, sec. 3, P. L., 246).
Dividends, not to exceed 5 per cent a year on the deposits,
are regulated so that the depositors receive the net profits
of the corporation after the trustees have deducted such
amount as they think necessary as a surplus fund for the
security of depositors, which, up to the amount of 15 per




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Monetary

Commission

cent a year of deposits, the trustees m a y accumulate
against loss. Dividends may be regulated by classes arranged according t o the dealings of t h e different depositors
with t h e savings bank. When t h e surplus amounts to 15
per cent of deposits, then, once in three years t h e accumulation beyond t h a t point m u s t be divided as an extra
dividend (act 20th May, 1889, sec. 22, P . I,., 246). The
provision of an earlier law, t h a t savings banks without
capital stock m u s t divide at t h e end of every year accumulations over a surplus equal to 15 per cent of liabilities,
seems overridden (act 17th April, 1872, sec. 1, P. L., 62).
II.—LIABILITIES

AND

DUTIES

OF

STOCKHOLDERS

AND

TRUSTEES.

Stockholders in " banking companies, saving fund
institutions, * * * and all other incorporated companies doing t h e business of banks or loaning or discounting moneys as such in this C o m m o n w e a l t h " are individually liable for debts and deposits to double t h e a m o u n t
of the capital stock held by each (act n t h May, 1874,
sec. 1, P. L., 135).
Every savings b a n k trustee must be a resident of Pennsylvania (act 20th May, 1889, sec. 28, P. L-, 246). There
m u s t be not fewer t h a n thirteen trustees; in case of insolvency of a savings bank, occasioned by t h e fraudulent
conduct of t h e trustees, those trustees who caused t h e insolvency are liable t o depositors and creditors individually,
each for his proportional share of t h e loss (act 20th May,
1889, sec. n , P . L., 246). No trustee m a y have any
interest in t h e profits of t h e savings bank, nor t a k e p a y
for his services except when his duties require regular
attendance at t h e savings bank, in which case a majority
vote of t h e trustees, exclusive of t h e trustee interested,
fixes t h e compensation (act 20th May, 1889, sees. 12 a n d




564

Pennsylvania

— Savings

Banks

27, P. L., 246). A trustee of a savings bank forfeits his
office by becoming the trustee or employee of another
savings bank, or by borrowing the funds of his bank, or
by failing to attend meetings or to perform duties for six
months (act 20th May, 1889, sec. 13, P. L., 246). If
trustees declare interest or dividends in excess of those
earned by the savings bank, those trustees who vote for
such declaration are individually liable to the corporation
for the excess declared (act 20th May, 1889, sec. 22, P. L.,
246). The trustees must examine at'least annually, with
a special view to comparing depositors' ledger with general
ledger (act 20th May, 1889, sec. 25, P. L., 246).
III.—SUPERVISION.

The act passed in 1895, digested under Banks, III,
covers savings banks. The banking department, with the
commissioner at its head, is in charge of the laws relating
to savings banks. Section 6, providing that reductions
of capital, if not made good after sixty days' warning from
the commissioner, are ground for proceedings for a dissolution, applies, according to its language, to "every corporation subject to the supervision of the banking department;" but the provision applicable to mutual savings
banks seems to be the following: Whenever it appears to
the commissioner from a report "of any corporation not
having any capital stock and doing business exclusively
for the benefit of depositors," or from the examination of
a corporation of that sort, that it has violated the law or is
conducting its business unsafely, the commissioner orders
a discontinuance of the unauthorized practice, and if the
corporation fails to comply, or whenever it appears to the
commissioner that it is unsafe for the corporation to continue business, or that a trustee has been guilty of misconduct, the commissioner communicates the facts to the
attorney-general, who proceeds as the case may require,




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Commission

possibly for the removal of trustees, for the transfer of
corporate power to other persons, etc. The court applied
to may decree a dissolution (act n t h February, 1895, sec.
7, P. L., 4). The section given under Banks, authorizing
the commissioner to institute through the attorneygeneral the same sort of proceedings, in case a corporation refuses to submit to examination, applies to "any
corporation" (act n t h February, 1895, sec. 8, P. L., 4).
If the commissioner, after an examination, concludes that
a corporation is in an unsound condition, or that it is conducting its business contrary to the interest of the public,
he advises the attorney-general, who sues for a receiver;
pending the appointment the commissioner may appoint
a temporary receiver. This section applies to "any corporation with or without capital" (act n t h February,
1895, sec. 9, P. L-, 4). Savings banks are within the terms
of the statute providing for the same proceedings as those
just given in case reserves fall below the required amount
and are not made good after thirty days' notice from the
commissioner (act 8th May, 1907, P. L., 189).
Whatever duties are by other acts incumbent upon the
auditor-general, the act of 1895 transfers to the commissioner (act n t h February, 1895, s e c - IO> P- L-> 4)- If
the auditor-general or one of his examiners finds that the
trustees of a savings bank are violating the spirit of the
provisions allowing savings banks to deposit temporarily
pending investment, they report to the attorney-general,
who proceeds against the corporation (act 20th May, 1889,
sec. 18, P. L-, 246). The auditor-general may withhold
authority to begin business if he does not think that the
location, fitness of incorporators, etc., warrant granting it
(act 20th May, 1889, sec. 3, P. L., 246).
If savings banks are within the term "banking institutions," they may be depositories of state moneys, in
which case, certain duties with regard to their selection




566

Pennsylvania

— Savings

Banks

devolve upon the commissioner (act 17th February, 1906,
P. U 45).
REPORTS.

Every corporation subject to the supervision of the
banking department makes to the commissioner not fewer
than two reports a year in the form prescribed by him,
stating resources and liabilities on a past day specified by
him; the report is transmitted within five days after receipt of his request and an abstract is published in a local
newspaper. He may call for special reports. He makes
an annual report to the governor as stated under Banks
(act n t h February, sees. 5 and 12, P. L., 4). A late statute requires savings banks to report very completely in
respect to liabilities, both to depositors, etc., and for money
borrowed (act 12th June, 1907, P. L., 525).
It was provided in the savings-bank act of 1889 that each
savings bank should report annually to the auditor-general
in a form prescribed by him, stating the following: The
amount loaned on bonds and mortgages, with a list, and
the location of the mortgaged premises not previously reported, and a statement of previously reported mortgages
that have been paid, foreclosed, etc.; the cost and value of
stock investments; amount loaned on pledge of securities;
amount invested in real estate; cash on hand and on deposit, with names of depositaries and amount deposited in
each; and such other information with respect to assets as
the auditor-general requires; also liabilities, amounts due
depositors, including dividends, and other claims which are
a charge upon assets; amount deposited during the year
and amount withdrawn; interest or profits received or
earned; dividends credited to depositors; number of accounts opened or reopened, number closed, and number of
accounts open at the end of the year (act 20th May, 1889,
sec. 23, P. L., 246). Savings banks having capital stock




567

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Monetary

Commission

must report for purpose of taxation (act 15th July, 1897,
sec. 1, P. Iy., 292).
Early legislation given under Banks provided that banks
and savings institutions authorized to declare dividends
among stockholders should publish for four weeks in each
year in a local newspaper a statement of unclaimed dividends over $5, with names, residences, etc., of the persons
in whose favor the dividends were declared, and that " each
of the said banks, savings institutions," etc., and "each
and every saving-fund society," etc., authorized to receive
deposits should annually publish a statement of names and
residences of depositors who had not dealt with their deposits for three years and who were due at least $10, dates
of deposits, amounts, etc. (act 6th March, 1847, sees. 1,2,
and 3, P. L., 222). There are provisions for reporting to
the auditor-general, and later paying into the state treasury, deposits unclaimed for thirty years (act 17th April,
1872, sees. 2 and 3, P. L., 62). Decreases in capital must
be published (act 22d June, 1883, s e c - 2> P- L., 155).
EXAMINATIONS.

Every corporation subject to the supervision of the
banking department must be examined by the commissioner or a subordinate as often as he thinks proper (act
29th May, 1901, sec. 1, P. L. 345). Besides the provision
for examinations in the recent banking act just given, there
were the following provisions in the savings bank statute:
The auditor-general and a local court, once in two years
must each appoint an examiner to investigate savings
institutions, upon whose examination certain proceedings
might be based not unlike those provided in the statute of
1895, but the savings-bank statute on this point seems
clearly overridden by the act of 1895 (act 20th May, 1889,
sec. 24, P. L., 246). The savings-bank act also required
the trustees to make a thorough examination at least once




568

Pennsylvania

— Savings

Banks

a year of the affairs of the savings bank to make sure that
the balances in the depositors' ledger are accurate, etc.
(act 20th May, 1889, s e c - 25> P- L., 246).
IV.—RESERVE REQUIREMENTS.

See this heading under Banks.
V.—DISCOUNT, LOAN, AND DEPOSIT RESTRICTIONS.

See first paragraph under this heading in Banks; the
provisions limiting directors' loans, and prohibiting loans
on the bank's own capital, apply to savings banks with
capital; the provision authorizing mortgage loans and limiting their amount, applies, if savings banks are within the
quoted language.
The following provisions are part of the savings-bank
act: No trustee or officer of a savings bank may directly
or indirectly borrow its funds or deposits, nor be surety,
nor in any manner an obligor for moneys borrowed of his
savings bank (act 20th May, 1889, sec. 12, P. L., 246). No
savings bank may loan deposits on notes, bills of exchange,
or drafts, or discount notes, bills of exchange, or drafts (act
20th May, 1889, sec. 19, P. L., 246). The aggregate deposits to the credit of one individual or corporation at any
one time must not exceed $5,000, exclusive of accrued
interest (act 20th May, 1889, sec. 15, P. L., 246).
[If savings banks are within the language, " any bank in
this Commonwealth," they are subject to the limitations
on incurring liabilities given under Banks, V.]
VI.—INVESTMENTS .

If savings banks are within the language "any bank or
banking company of this Commonwealth," they may
improve the real estate held for the accommodation of
their business by erecting new buildings, etc., and may




569

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Mon etary

Commission

rent premises, but must not reduce for this purpose the
surplus below 50 per cent of its amount when the improvements were begun (act 21st May, 1901, sec. 1, P. L., 288).
No savings bank having a capital stock may hold any of
its capital, unless the purchase is necessary to prevent
loss of a previous debt contracted on surety thought
adequate at the time, or in case of forfeiture of the stock
for nonpayment of installments; and stock so purchased
must not be held for longer than six months if it can be
sold for what it cost the corporation (act 14th June, 1901,
sec. 2, P. L., 561). "Banks chartered under the provisions of the laws of the Commonwealth of Pennsylvania " may loan on the security of bonds and mortgages
on unencumbered real estate in Pennsylvania not in
excess of their time deposits and may invest their funds
not exceeding 25 per cent of their capital, surplus, and
undivided profits, in the purchase of such mortgages.
They may purchase any interest-bearing individual or
corporate obligation (act 10th July, 1901, sec. 1, P. L.,
639).
A statute of 1889, providing for the extension of charters
of financial corporations, enacted that savings banks
without capital, renewing charters after 1889, would do
so on condition they have no powers of a bank of discount, and may loan deposits only on first mortgage of
Pennsylvania land, on securities of the United States,
Pennsylvania or Pennsylvania municipalities, or on "any
other good and valid securities" (act 10th May, 1889,
sec. 1, P. L., 185).
Special provisions of the savings-bank statute are the
following: Savings banks may hold real estate only as
follows: Such as is necessary for the immediate accommodation of the bank in its business; such as has been
mortgaged to it to secure previous debts; such as it purchases at judicial sale under lien held by the bank, 01




570

P ennsylv

ant a — Savings

Banks

purchases to secure debts due it (act 20th May, 1889,
sec. 8, P. L., 246). No savings bank may deal in real
estate or any commodities except as authorized by the
act, and except such personalty as is necessary for the
transaction of its business (act 20th May, 1889, sec. 21,
P. L., 246). Deposits may be invested only as follows:
(1) In United States securities; (2) in Pennsylvania securities; (3) in securities of any State which has not
within ten years defaulted in payment of principal or
interest of a debt; (4) in securities of municipalities in
any State; (5) in any bonds and mortgages on unincumbered improved real estate in Pennsylvania. Pending
an opportunity to invest, a savings bank may temporarily deposit in banks or trust companies (act 20th May,
1889, sees. 17 and 18, P. L-, 246).
X.—UNAUTHORIZED BANKING.

See this heading under Banks.
XL—PENALTIES.

If savings banks are within the expression "any bank,"
then their officers, directors, agents, etc., who commit the
offenses named first under Banks, XI (false statements,
etc.), are subject to the penalty there given (act 8th May,
1907, P. L., 180). Savings banks are clearly within the
provisions of the act which punishes failure to set out liabilities to depositors, for borrowed money, etc., in full in
reports, by a fine on the offending officer of $1,000, imprisonment for one year, or both (act 12th June, 1907, P. L.,
525). The punishment for receiving deposits during insolvency is as given under Banks, XI. For certain officers ' offenses made misdemeanors in the case of savings
banks in common with other corporations see act 12th
June, 1878, sees. 3, 4, and 5, P. L., 196.




571

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Monetary Commission

T h e penalty for failing t o report under t h e savingsb a n k a c t was forfeiture of $100 per d a y (act 20th May,
1889, sec. 23, P . L., 246); b u t see t h e later a c t creating
a banking d e p a r t m e n t , which provides t h a t if a n y corporation vSubject t o t h e supervision of t h e banking departm e n t fails t o m a k e a report it is subject, a t t h e discretion
of t h e commissioner, t o a penalty of $20 p e r d a y (act
n t h February, 1895, sec. 5, P . L., 4). See Banks, X I , for
penalty for disclosure of d e p a r t m e n t information b y a n
official (act n t h February, 1895, sec. 16, P . L., 4 ) , for
penalty f©r n o t publishing unclaimed dividends a n d
deposits (act 6 t h March, 1847, sec. 3, P . L., 222), for
penalty for embezzlement a n d other frauds b y officers,
clerks, employees, etc. (act 23d April, 1909, No. 119), a n d
for penalty for circulating a false report derogatory t o t h e
financial condition of any "'financial i n s t i t u t i o n " (act 23d
April, 1909, No. 121).

TRUST COMPANIES.
I . — T E R M S O F INCORPORATION.

See Banks, I, for t h e constitutional provision requiring
notice of t h e organization of a corporation with banking
privileges.
If t r u s t companies do a banking business, it m u s t b e
under a n a c t authorizing t h e m " t o receive deposits of
moneys a n d other personal property, a n d issue their
obligations therefor" (act 29th May, 1895, sec. 1, P . L.,
127). The capital stock of a t r u s t company m u s t n o t b e
increased t o exceed $2,000,000 (act n t h J a n u a r y , 1885,
sec. 2, P . L., i n ) . I t m u s t not b e decreased t o less t h a n
$50,000 (act 22d June, 1883, sec. 2, P . L., 155). Shares
m a y be of as small a p a r value as $50 (act 14th J u n e ,
1879, sec. 1, P . L . , 9 4 ) -




572

Pennsylv ania
II.—LIABILITIES

AND

— Trust
DUTIES

OF

Comp antes
STOCKHOLDERS

AND

DIRECTORS.

(See Banks, II.) The provision for double liability
includes " t r u s t companies, and all other incorporated
companies doing t h e business of banks or loaning and discounting moneys as s u c h " (act n t h May, 1874, sec. 1,
P . L., 135).
III.—SUPERVISION.

See Banks for explanation of supervisory officials and
for proceedings against insolvent corporations, etc. (act
n t h February, 1895, sees. 1, 2, 6, 8,9, and 16, P . L., 4; and
act 8th May, 1907, P. L., 189). For t r u s t companies, as
state depositaries, see act 17th February, 1906, P . L., 45.
There seems no reason to suppose t h a t the provisions of
the acts of 1876 and of 1850, with regard to supervision,
given under Banks, apply to t r u s t companies. W i t h
regard to REPORTS t h e provisions from the act of the
n t h of February, 1895, given under Banks, apply, as
well as those of act 12th June, 1907, P. L., 525, requiring liabilities to be reported with particular completeness. Trust companies seem also within t h e provisions
of t h e s t a t u t e of t h e 6th of March, 1847, given under
Banks, requiring unclaimed dividends of over $5 and
unclaimed deposits of over $10 to be reported annually.
Reductions in capital m u s t be published (act 22d June,
1883, sec. 2, P . Iy., 155). The provisions of t h e acts of 1850
and 1876, given under Reports under Banks, I I I , m a y
probably be ignored in t h e case of t r u s t companies. E X A M I NATIONS are held as often as t h e commissioner thinks
proper (act 29th May, 1901, sec. 1, P . Iy., 345).
IV.—RESERVE

REQUIREMENTS.

(See Banks, IV.)




573

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Commission

V . — D I S C O U N T AND L O A N R E S T R I C T I O N S .

T r u s t companies are within t h e provisions of t w o of t h e
sections passed in 1901. No director m a y receive a loan
greater t h a n 10 per cent of t h e paid-in capital a n d surplus,
and t h e gross a m o u n t loaned t o all directors and officers
a n d t o firms in which they are interested m u s t n o t exceed
25 per cent of paid-in capital a n d surplus. No t r u s t comp a n y m a y t a k e as security a lien on its own capital; t h e
same surety m u s t be required of shareholders as of persons
n o t shareholders (act 14th J u n e , 1901, sees. 1 a n d 2, P . Iy.,
561).
T r u s t companies m a y loan money " o n real a n d personal
securities" (act 29th May, 1895, sec. 1, P . L., 127).
VI.—INVESTMENTS .

No t r u s t company m a y hold its own capital unless t h e
purchase is necessary t o prevent loss on a debt previously
contracted on surety deemed adequate a t t h e time, or in
case of forfeiture of t h e stock for n o n p a y m e n t of installm e n t s ; stock so purchased m u s t n o t be held for longer t h a n
six m o n t h s if it can be sold for w h a t it cost (act 14th J u n e ,
1901, sec. 2, P . L., 561). T r u s t companies m a y " i n v e s t
their funds in
* * * real a n d personal securities"
(act 29th May, 1895, s e c - x> P- L., 127).
X.—UNAUTHORIZED TRUST COMPANY BUSINESS.

No person, firm, or corporation, except corporations
under the supervision of the banking department of Pennsylvania, or some other State, may advertise or use " t r u s t "
as part of its name. Violation of these rules entails a
penalty of not more than $500 for each offense (act 22d
April, 1909, No. 75).




574

P ennsylv ania — Trust

Companies

XL—PENALTIES.

$ee Banks, XI, for penalties for false statements, false
entries, etc., and for not reporting liabilities with especial
completeness (acts 141 and 331 of 1907); for penalty
for disclosure of information by a department official and
for failure of a trust company to report (act n t h February,
1895, sees. 16 and 5, P. L., 4); for penalty for embezzlement and other frauds by officers, clerks, employees, etc.
(act 23d April, 1909, No. 119); and for penalty for circulating false reports derogatory to a trust company's financial condition (act 23d April, 1909, No. 121). The act of
the 12th of June, 1878, alluded to under Banks, includes
trust companies; and the penalties for receiving deposits
in an insolvent trust company (act 9th May, 1899, s e c - l>
P. L., 145), and for failing to publish unclaimed dividends
and deposits (act 6th March, 1847, sec. 3, P. L., 222), are
as given under Banks.




575

RHODE ISLAND.
I n t h e General Laws of 1896, chapter 178 treated of
" b a n k s and institutions for savings" and chapter 179 of
" r e t u r n s of banks and institutions for savings." These
two chapters, together with whatever few a m e n d m e n t s
h a d been m a d e to them, and t h e other Rhode Island legislation on banks a n d trust companies were repealed b y an
act passed in 1908, chapter 1590. This act, a t the present
writing, covers the whole banking system of Rhode Island;
references in the digest are to sections in it. Mr. William
P. Goodwin, b a n k commissioner of the State, assured t h e
compiler, in a letter dated April 23, 1909, t h a t the 1909
session of the legislature had passed no laws affecting t h e
matters covered b y the digest.
BANKS.
I . — T E R M S OF INCORPORATION.

I t is clear t h a t commercial banks are allowed to receive
"savings or participation d e p o s i t s " (50, 55, 68, etc.).
Shares of stock may be issued only when paid for in
cash, and t h e whole capital m u s t be issued before business is begun (10).
II.—LIABILITIES

AND D U T I E S

OF

STOCKHOLDERS

AND

DIRECTORS.

There is no provision for double liability of stockholders, the provision to t h a t effect in section 9 of c h a p t e r 178




576

Rhode

Island

— State

Banks

of the General Laws having been repealed by 1908,
chapter 1590.
Every director of a bank or trust company must own
shares to t h e a m o u n t of $500 p a r (70).
III.—SUPERVISION.

The incorporation of banks, savings banks, and trust
companies is overseen by a board of bank incorporation,
consisting of the b a n k commissioner, the general treasurer,
and t h e attorney-general (4). The commissioner is appointed for terms of three years and receives a salary of
$4,000 (29). Neither he nor his deputy m a y be interested in a national bank in Rhode Island or a banking
institution organized under Rhode Island law, nor in any
business t h a t requires his supervision. He must not be
indebted to a banking institution organized under Rhode
Island law nor be interested in an investment, brokerage, or loan business (30). Information obtained by the
commissioner or a subordinate in the course of d u t y
must be kept secret (32). The commissioner m u s t approve of such depositaries of bank and trust company
reser