saving; his hope of comfort and support for future years. We are often met with the stock argument that the private banker should not be subjected to inspection and publicity for the reason that his individual responsibility is behind his institution. It's a grand idea, that, but without legal examination of both bank and personal responsibility how do you know that the latter will be available when you have to realize on it?

At one of the bankers' conventions held last fall, the governor of the state, in speaking of proposed legislation for the supervision of private banks, stated that he was himself a private banker and advised the representatives of banks under legal regulation first to perfect a system of examination before they preached the doctrine to the private banker; that he had read of too many failures just after examination certificates had been furnished, etc., etc. Admitting that he was absolutely right about the necessity for more perfect bank examinations, what did the man mean by the rest of it? Do supervised banks in his state have to try the ice before the commercial lives of the private banks are to be risked upon the frozen pond of commerce? This was in another state, but is there anything sacred about a private banker from Iowa, for instance? Is he anointed by divine right for the purpose of handling trust funds or receiving deposits that he should be allowed to pursue the broad and easy path of unrestricted banking which sometimes leads to a receiver, while the inspected and supervised "banks" are fighting out the details of bank examination through the centuries? If any experimenting is to be done, if problems are to be solved, by all means let us have our esteemed competitors, the private bankers, in school with us. We can study better if we do not have to look out of the window and see them having a good time diving in some financial swimmin' hole or chasing the butterflies and gathering the daisies of uncertain profit without restraint.

While there is plenty of just criticism relative to the sufficiency of bank examinations, both state and national, it can hardly be denied that they accomplish some good. We do not know how many lives are saved, for instance, through boiler inspection, and it is an unwritten chapter how many million dollars have been saved to depositors and stockholders of bank institutions through supervision. We are sure to hear of the inspected boiler or the inspected

bank going up in the air; it's a news-item when the trusted bank president goes wrong through speculation, but it is not very good logic to condemn inspection or trust on account of these exceptions; besides, there is no guess work about the merit in bank examination -the records prove it conclusively. Bank examinations can be made more effective. Nothing will guarantee the honesty of a trusted official, but his time of speculation can be limited and fraud can be made a very difficult and thorny path by perfecting the sys

tem.

In the interest of general commercial stability what bank would object to paying three or four times the present cost of examinations to have them made thorough, efficient and sufficient? No better investment could be made, and we shall see the day when the examiner will stay with a bank long enough to be able to give a reliable bill of financial health, and when his field will be so limited that he can obtain accurate information as to the value of the securities listed. It will be a long step in progress when the directors will be required to go over the notes and securities with the examiner. Some of our captains of industry who are directors in a dozen large banks would not have the time to do this, a fact which is positive proof that they should not be figureheads in so many institutions. In the perfection of the business of banking the duty of the director becomes more prominent, and his fulfillment of that duty more and more essential. One of the greatest evils of the system of banking is that directors will accept the responsibility of their important officers and in spite of the requirements of law and business methods, leave a president or a cashier to conduct a “oneman bank," until the officer becomes a moss-back, imbued with the idea that the bank is his personal property, and one who actually resents inquiry instead of being glad to divide the responsibility with those to whom a large share belongs-the board of directors.

Neither can I understand why men of probity and ordinary business sagacity will so far forget the sacred trust reposed in them as directors of banking institutions, will so far neglect their duty to the community, their friends and neighbors, as to permit some bank officer to have such freedom in management as to receive from his lips the wretched confession that the bank's accounts contain false entries; that he has organized a regular system of dishonesty among

subordinates; that hundreds of thousands of dollars have been appropriated under their very eyes; that the funds for which they are responsible legally and morally have been stolen while they were complacently admiring their own names prominently displayed on statement folders.

state.

I have for some time had the idea that we might also go higher up in perfecting the safety appliances of banking. Again using my native state as an example, some one willing to serve as a national bank examiner must be unearthed. I do not hesitate to say that qualifications of experience, knowledge and ability would have no weight whatever against political pull, in the appointment of a national bank examiner in the state of Iowa, and I believe it is the custom of the Comptroller of the Currency to make appointments in every state according to the recommendations of either the senators or the entire congressional delegations. Again, in the vicissitudes of politics, suppose that the wrong man should be appointed at the head of bank supervision. Imagine an incompetent or dangerous financier in the office of Comptroller of the Currency or auditor of We have always been fortunate in having a capable government servant in charge of national bank supervision, but it has in at least one instance happened more by a fortunate chance than as the result of thought and deliberation. When one remembers the vast interests under the regulations of that office and the fact that the enforcement of some of the wise provisions of the national bank act is hampered by the want of means and penalties, is it unreasonable to suggest that a commission, chosen for its knowledge of good banking and of high individual integrity, removed from politics and with all the force and dignity of our Supreme Court, with authority to appoint skilled examiners and power to enforce the letter and spirit of the law, would be none too important for the interests under its control? When we want to dig a canal we look for hundredthousand-dollar competency, and if it is not to be found we get along with several twenty-five thousand dollar engineers; but when it comes to opening and maintaining that most important canal of business confidence, through which flows the credit of the nation, the life-giving stream of commerce, we hand out a title and a prospect of possible political advancement or an ultimate paying job with a city bank.

UNIVERSITY

Some of our banking institutions are getting pretty large, and the great concentration of banking power has brought with it an increasing investment of the people's deposits in speculative securities and a diminishing proportion of investments in legitimate commercial loans. The dangers of our great banks tending toward the promoting finance company rather than the bank of deposit and discount, and the temptations following great financial power to the officers of those institutions, are before us. A commission which would carry all the prestige, weight and importance of our Supreme Court is needed to hold down the great bankers to the strict regulations of law and the requirements of safe commercial banking, for they are in a measure a part of that limited body of men suffering from the "get-big-quick" mania whose power has become so vast that there is a live popular demand for commissions to control them in other walks of trade and commerce.

The public is justified in demanding not only that every institution which accepts deposits under the sacred name of bank-the emblem of confidence and credit-should be under proper legislative control and subject to examination and efficient supervision, but that every bank now under such legal restrictions should be subject to such stringent enforcements of its requirements as will compel it to do a legitimate banking business-not a speculative or "stock washing" business-and to carry out the proper functions of banking. If anything short of the most effective control, examination and supervision possible to enforce were contemplated, far better for those institutions already under supervision to let state and nation keep hands off the private bank now running without legal restrictions. Anything short of wise and thorough regulation would mean the throwing of the cloak of legal sanction around such to the detriment of banks now profiting through the confidence-accorded state, national and properly supervised private banking institutions— where the public happens to think and discriminate.

We have come to a passage in our national career where clear minds, stout hearts and strong hands are required to guide the ship of state between the rocks of socialism and the reef of business autocracy; the very safety of our republican institutions depends upon control of the rudder and the constancy of the brilliant searchlight of publicity. We will come through safely, God grant, but

this is not the time to blink at dangers that threaten; not the time to dismiss them with a flippant word as to government interference, commercial independence and the evils of too many laws.

THE EVOLUTION OF THE BANKING LAW

ADDRESS DELIVERED BY THOMAS B. PATON, EDITOR OF THE "BANKING LAW JOURNAL," BEFORE THE MISSOURI BANKERS' ASSOCIATION IN MAY, 1902.

It has seemed to me that one of the things which might claim some small share of attention is the subject of the laws which govern business dealings; not so much the laws which govern the organization and powers of banking corporations as those laws which govern the instruments of trade in which bankers deal, the bills, notes, checks, and other instruments representing money, and the documentary securities representing property values, which constitute the bone and sinew of the mercantile wealth of the country, and which it is the peculiar office of the banker to deal in and to make effective. It is concerning the laws which govern these instruments of trade, as well as the laws which govern the acts of the banker as the agent of commerce-how these laws have grown up and been developed, their present condition, and how they are applied and enforced in the various states of this great American Union-whether they are entirely satisfactory as they now exist, or whether there is room for improvement-upon which I desire to submit a few remarks.

Now, it is hardly necessary as preliminary to a discussion of the laws to say anything about the importance of the negotiable instrument—the bill, the note, and the check-as an instrument of commerce, and of the part the banker plays to make that instrument effective. Every individual transaction of the vast multitude of daily dealings, whereby goods are sold or services performed, requires the payment of money or some equivalent; and as modern trade transactions are conducted largely on credit, the negotiable instrument, as a substitute for money, is the medium for payment most largely employed. If there were no such thing as a negotiable