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Table D.

Compilation of resources and liabilities of National, State and Savings Banks located

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On March 28th, 1906, after an examination by this department, a resolution was adopted by the board of directors of the Bank of North Freedom placing the affairs of said bank in the hands of the commissioner of banking under the provisions of section 24 of chapter 2 of the banking law. This temporary suspension of payments was the result of mismanagement. Possession was accordingly taken by the undersigned on March 29th. In order to place the bank in a solvent condition, it was necessary to replace the full amount of the capital to-wit: $10,000.00, and to make good an additional amount of about $8,000.00, made up of doubtful and unbankable assets. This was accomplished. The stockholders paid to the bank in the neighborhood of $8,000.00 in cash, and surrendered all of their stock to the bank. Thereupon, the stock was sold at par to new subscribers. The capital being thus replaced and the bank restored to solvency, authority was granted on April 20th to re-open the bank on April 26th.

Since the enactment of the banking law of 1903, the Bank of North Freedom was the seventh bank to avail itself of the pro

visions of section 24 above named, by placing its affairs. in the hands of the commissioner of banking, and was thereby enabled to reorganize. Without the aid of section 24, receivership

could not well have been avoided.

TRUST COMPANIES.

Trust companies increased in numbers from seven to eleven during the year. Their paid in capital has been increased from $1,482,500.00 on December 8th, 1905, to $2,111,650.00 on November 12th, 1906, the surplus fund from $137,975.00 to $213,250.00 and the total resources from $6,348,114.99 to $7,717,164.12. Statements of the several trust companies and an abstract of the same follow the bank statements in this report.

BANK SUPERVISION.

The

Bank examinations and periodical reports alone were certainly not intended as the full extent of bank supervision. five reports called for from banks during the year must be thoroughly analyzed. The same applies to the semi-annual reports of the examining committee appointed under the law by the ooard of directors, copies of which reports are filed in this department. Periodical examinations made on behalf of the department must be followed up by a careful supervision of the work of the officers and directors and of the various phases of a bank's activity. When searching examinations are thus supplemented, when a thorough investigation of every irregularity reported or discovered is made from the headquarters of the department, above all, when bank directors are strictly held to their sworn duty, then, and then only, does bank supervision constitute the full measure of protection to depositors contemplated by law.

It has been my endeavor to conduct the work of this department along these lines, and to make it plain to bank directors, whenever necessary, that the law imposes upon them active, not passive, duties. Early after the enactment of the banking laws of 1903, a circular letter was sent to all bank directors, point

ing out the principal duties imposed by law upon them, and concluding as follows:

"From the above synopsis, it will be readily seen that the duties of Directors are not at all onerous. Once the Directors beome thoroughly familiar with the condition of their bank— and this can be attained by a careful examination of its assets and liabilities and the direction of its affairs thereafter will not involve many difficulties nor will it require more time than any business man can reasonably spare.

The executive officers attend, of course, to the details of the business. Than this department none can better realize the difficulties of their position and the responsibilities with which they are burdened, and none is in position to more thoroughly appreciate their faithful work. Far from being intended to cast reflections upon them, the object of this letter is to invok for them the assistance and partial relief from responsibility contemplated by law."

This letter was dated January 20th, 1904. Later, oral instructions were given to examiners to request the presence of one or more of the directors during each examination. On the whole the response was good, but in some cases directors failed to assist in the examination of their bank; therefore in September, 1906, the following letter was sent to all state bank directors, to-wit:

"Dear sir:-In order to obtain best results from official examinations of banks, the examiners of this department have been instructed to request the presence and assistance of one or more of the directors during each examination. It is obvious that the value of these examinations can be greatly enhanced by active cooperation of local members of the Board, and it is hoped that whenever a bank examiner makes his appearance in your institution you will find it convenient, when so requested, to leave your other business long enough to devote to the bank with which you are connected as director the time requisite to give the examiner such information as he may seek and as you may have to impart.“

This request is bearing fruit. The response on the part of directors has been prompt, and valuable assistance has been given the examiners.

From the above, it will be seen that the provisions of the law that "the affairs of the bank shall be managed by a board of directors" and that "every director shall take and subscribe an

oath that he will diligently and honestly perform his duty in such office" are constantly kept in view, and the enforcement of these wise provisions constitutes one of the most important features of the work of this department.

No bank failures occurred in Wisconsin during the year covered by this report, nor during the year previous. This immunity is justly attributable to the excellence of our banking law and to the commendable willingness of bankers to conform to its provisions. The relations between the banking department and the bankers have been of the most pleasant character, and I take this occasion to express to bankers of the state my high appreciation of their uniform courtesy in our official intercourse, and of their ever ready response to suggestions offered.

LEGISLATION.

1. Savings Deposits.

Savings deposits, by which term I mean the savings of wageearners and other persons of small means accumulated, as they generally are, by industry and strict economy, ought, in my opinion, to be treated in all legislation apart from commercia and other bank deposits. In our social structure, thrift is virtue, and deserves to be fostered and encouraged. Nothing so demoralizes the habit of saving as the failure of a bank in which the savings are deposited. In no better way can thrift be stimulated than by making savings deposits absolutely safe. Too much emphasis cannot be laid on the desirability of some legislative action which would prevent such disasters to savings depositors as often result from failures of commercial banks which conduct savings departments.

In Wisconsin many of the commercial banks solicit and receive savings deposits. Attention is here arrested by the inconsistence in the present statute where, in the chapter devoted to mutual savings banks, a certain standard of investment of savings funds is established (sec. 13, ch. 3), while in another chapter, commercial banks, for which an entirely dif ferent and more liberal field for investments is open, are vested

in specific terms with the right to receive savings deposits. (Par. 6, sec. 4, ch. 2.) It does not appeal to me as being proper that savings funds should be hazarded in the ordinary business ventures. While it is true that there were no recent failures in this state, it is also true that there have been failures in the past, some of which brought untold misery to the homes of those depending upon their daily labor for their sustenance, and upon their savings for independence of public charity in case of sickness or other adversity.

To my mind, the mutual savings bank system in vogue in the New England states and in New York affords the ideal method for taking care of savings deposits. These banks are not stock which to pay dividends;

corporations, there is no capital on they are managed by a board of trustees and the net profits are periodically divided among the depositors. In Wisconsin a law authorizing the organization of mutual savings banks, patterned after the New England laws, was enacted in 1876, but only two mutual savings banks have been established. This shows that the advantages of this system are not understood or not appreciated. A mutual savings bank is a philanthropic institution, and usually of slow growth. Having no capital, it is essential that conditions surrounding its organization and the character of its management must be such as to inspire confidence. Unless a sufficient number of leading citizens of the community become imbued with the spirit of philanthropy to the extent that they become enrolled as trustees and will devote some of their time to the management of such an institution without immediate reward in dollars and cents, a mutual savings bank will be handicapped and its success may be doubtful.

In Wisconsin, at this late period, where so many commercial banks have for years been conducting savings departments, sometimes as a side issue and occasionally as their main business, a practical solution of the problem at hand would seem to lie not so much in the classification of banks into commercial banks and savings banks as in the classification of the deposits. To this end, it would only be necessary-and I recommend this plan

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