Many persons advocating State supervision of all institutions receiving public deposits ask that a separate banking law, for the government of private banks, be enacted. In my opinion this would be unwise and injudicious. Our present general banking law is adequate for the transaction of sound, conservative banking, and as the law was amended at the last session of the Legislature so that banks with a capital of $15,000 may be incorporated in villages whose population does not exceed 1,500, there is no reason why private banks with corporate names should not become incorporated, and make public the amount of capital in their business, the amount of deposits they have received from the public, and the securities they have taken for the money loaned. In my opinion, an institution that has not á capital of at least $15,000 should not be dignified by the name, bank. BUILDING AND LOAN ASSOCIATIONS. In each of my former reports, I have urged that building and loan associations be placed under State supervision. The failure of the "Iron Hall" and other "investment companies" throughout the country during the past year, has created a widespread feeling of distrust of all institutions which invite public deposits. This distrust, in case of financial depression, would not only injure building and loan associations, but would materially affect every banking corporation in the State. I therefore earnestly urge that some action be taken by the Legislature that will make more secure the depositors in these associations, which, in the past, have been so beneficial to those persons, whose chief object in becoming members, was, to secure for themselves homes. This was the primary object of building and loan associations, and in my opinion, whenever any association goes outside the home building plan, and become "bankers" or "investors" under a law enacted for an entirely different object, they open wide the door for fraud and corruption, and bring discredit upon all institutions that are honestly trying to conduct a legitimate business. The failure of the Fidelity Savings Loan and Security Association, of Grand Rapids, has impressed the officers and members of building and loan associations throughout the State, with the necessity of State supervision, and I note with pleasure that, at the meeting of the State Association, held at Bay City, December 8, 1892, a resolution was unanimously adopted declaring for State supervision. I would also ask that some action be taken in regard to those associations incorporated in other states and doing business in this. If state supervision of foreign insurance companies doing business in this State is necessary, it is of much more importance that there be State supervision of foreign building and loan associations, mortgage, investment, and other companies, who transact their business in this State, without any restrictions or limitation of law. SAVINGS BANKS. The total number of savings banks, or banks with savings departments, at this date is 103, and the savings deposits in these banks was reported to 2 this department December 9, as $37,909,010.12, and the number of savings depositors 185,492. At the time the present banking law became operative I had some doubt as to the wisdom of section one, which allows banks to incorporate with savings and commercial departments for the transactiou of both classes of business. I see nothing as yet, however, that would lead me to suggest the changing of the law, especially in small towns and villages, where the union of the two classes of business under one management is of great profit and convenience to the public. SHAREHOLDERS. The total number of stockholders in the State banks of Michigan at this date is 4,885, and is divided as follows: One thousand three hundred and seventy-six owning $500 and less. One thousand four hundred and eighty owning more than $500-up to and including $1,000. Seven hundred and sixty-three owning more than $1,000-up to and including $2,000. Four hundred and one owning more than $2,000--up to and including $3,000. One hundred and sixty-three owning more than $3,000-up to and including $4,000. Two hundred and eighty-three owning more than $4,000-up to and including $5,000. Four hundred and nineteen owning more than $5,000. From this table we see that 2,856 bank stockholders, or more than half of the total number, own $1,000, or less, of the capital stock of Michigan State banks. This is a gratifying exhibit, as it demonstrates that the banks of Michigan are largely controiled by persons of small means, or those engaged in active business. EXAMINATIONS. Each bank and trust company in the State has been visited during the year by an examiner, and an examination made of cash, bills, collaterals or securities, books of account, etc., and I am pleased to report, that, as compared with last year, the banks have greatly improved in their financial condition, and methods of conducting their business. There is one matter, however, in which there could be great improvement, and that is in the selection of officers and directors. Too many of the banks of the State elect honorary officers and directors, rather than those who give special attention to the affairs of the bank. It is my opinion, based on observation, that in reserve cities especially, either the president or vice president, with the cashier, should devote their whole time to the affairs of the association they represent, and not allow themselves to be advertised as doing so, when they spend but a few minutes each day at the bank. The same can be said of a board of directors. It is better that a banking association elect seven directors that really direct the affairs of the bank, than to elect fifteen because of their social standing, eight of whom give but little or no attention to the business they are expected to oversee. In the succeeding pages of this report will be found comparative abstracts of published reports, also detailed statements of each individual State and national bank in Michigan. RECEIPTS AND EXPENSES. The amount received during the year from the several banks as fees, being one hundredth part of one per cent of the gross amount of the assets of the bank at the time the examination was made, amounts to $7,785.21, which has been deposited with the State Treasurer as required by section 40 of the banking law. The expenses of the department for the year closing December 31, is $9,114.93, and is made up of the following items: Salary of T. C. Sherwood, commissioner. Salary of E. A. Sunderlin, deputy commissioner. Salary of L. M. Sherwood, chief clerk and examiner. Salary of extra clerk.. Expenses incurred in examination of banks Miscellaneous expenses, viz., printing, postage, stationery, etc. $2,500 00 2,000 00 1,500 00 250 00 2,426 62 438 31 For list of banks examined, and the amount paid by each, see succeeding pages. CONCLUSION. In closing this, my last report as Commissioner of the State Banking Department, I would ask for my successor the same courteous treatment and forbearance that has been so generously extended to me by the bankers of Michigan, during my four years' term as Commissioner. Whatever of success has attended my efforts in the organization of this new department, very much is due to the bankers of Michigan, who have so willingly seconded my every effort to make uniform, under the new law, the State banking system. Few persons outside of those actively engaged in banking, have fully appreciated the situation of the State bankers of Michigan during the past four years, or comprehended the crisis through which they have passed, in changing from the old system of banking to the new, with the necessary restrictions and limitations. Many bankers voted against the adoption of the banking law, because they did not believe the change could be made without a panic, or serious financial complication. In consummating this change, very much of the work has, of necessity, been somewhat private, for the publication of the changes required of some of the banks which had for years been without adequate supervision, would have created distrust and unnecessary alarm in banking circles, and injured the delinquent bankers who were trying to conform to the requirement of the new law, and clear themselves of unprofitable investments, which had been the accumulation of years. That this change from the old banking system to the new has been accomplished with the failure of but one bank, is a matter of gratulation among the business men of the State, and speaks well for the integrity of Michigan bankers, who were willing and ready to set aside personal opinions and personal interests for the public good. In conclusion, I desire to publicly acknowledge the efficient service of those associated with me in official duties, and wish to express my appreciation of their efforts to make successful the department charged with the execution of the banking law. THEODORE C. SHERWOOD, Commissioner of the Banking Department. |
