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sence of any judicial determination as to their proper meaning. In view of the fact that the several banks of this state organized under the general banking law, are subject to state supervision, not only for the protection of the banks themselves, but for the protection of the persons doing business with such banks, the laws relating thereto should be construed in such a manner as to afford such protection in every possible way, until such time as the courts may determine otherwise.

In answer to your first question, I would therefore say that in my opinion the amount which the directors of a bank would be authorized to loan to any person, or company, or corporation, or firm, by a two-thirds vote of its board of directors, would not exceed one-fifth of the capital and surplus of the bank, and it would be immaterial whether such loan was secured or unsecured, excepting, of course, loans on real estate or other collateral securities authorized by the general banking law.

In answer to your second question, I would say that the same rule would apply to any one line of commercial paper that would apply to any one person, company, firm or corporation.

In answer to your third question I would say that in my opinion it is immaterial whether such loan is secured by the bond or personal endorsement of the officers or directors of the firm company or corporation, or by the assignment of value as collateral, except where such loan is made upon real estate or other collateral securities recognized by the general banking law. In this connection I call your attention to the rule laid down in the Amer. & Eng. Ency. of Law, Vol. 21, 2nd ed., page 382, to the effect that "Drafts. may be bona fide bills of exchange drawn upon actual existing values within the meaning of the statute, though not accompanied by specific bills of lading in each case.

It is sufficient if they are drawn against property previously consigned and existing either in its original form or in the shape of proceeds of sales in the hands of the consignees.” This rule, of course, applies to the federal statute. The state and federal statute being identical in this particular, unquestionably the same rule would apply to a bank organized under the general banking law of this State.

Respectfully yours,


Attorney General.

At the last session of the Legislature, section 39 of the banking law was amended so as to provide for two examinations of reserve city banks during the calendar year. I am very much pleased with the results obtained under this amendment and would suggest a further amendment providing for the examination of all state banks at least twice during the year. In this connection permit me to state that the Department is very much pleased with the co-operation it has uniformly received from the bankers of our state, in their desire to comply with the law.

The question of excessive loans, as defined by the rulings of the Attorney General, as shown by his letter in another part of this report, has been a very important one for the consideration of the bankers, and I am pleased to say that the Attorney General's interpretation of the law governing this question which has been closely followed by this Department during the past two years is now very generally observed. The uniform courtesy with which our letters of criticism to the banks have been observed and answered and the hearty co-operation of the executive officers of banks with the representatives of this Department, is highly appreciated by the Commissioner and bespeaks the most hearty co-operation of this Department and the banking interests of Michigan.

It affords me great pleasure at this time to acknowledge the valuable services rendered the Department by Deputy Commissioner Wm. Donovan, and examiners B. C. Jolly, Harmon Wendell, E. E. Ford, W. T. Bradford, Albert E. Manning, and Charles M. Turner.

Very respectfully,

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Comparative abstracts, giving the volume of business as shown by the last reports of

Michigan State banks called for in the years 1889, 1890, 1891, 1892, 1893, 1894, 1895, 1896, 1897, 1898, 1899, 1900, 1901, 1902, 1903, and 1904, as made to the Commissioner of the Banking Department.

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Loans and discounts......

Stocks, bonds and mortgages..

Banking house, furniture and fix-


$22,624,667 12. $27,628, 145 10 $30,543,959 76 $38,883, 892 66 $32, 102,874 53 15,613,031 54 15, $16,687 08 21,308,913 14 26,813,183 47 24,804,367 45

165,315 19 183,645 30 195,618 49 222,519 92 206,537 17 523, 465 20 714,313 50 941, 191 77 1,274,415 65 1,517,146 91 253,782 59 311, 476 52 350,381 69 692, 412 41

617,824 26 276,624 57 266,114 72 307,386 18 364.088 85

395, 207 14 210,872 79 217, 130 03 145, 182 78 271, 126 84 352,701 31

Other real estate..
Expenses and taxes paid...
Interest paid.
Premiums paid.

Due from banks in reserve cities..

5,182,241 12

5,712,028 27

7,481,885 31

9, 135, 452 69

7,536,024 09

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$17,354,277 90 $56,950,395 68 $65, 191,972 53 $52,619,533 48 $73, 156, 116 80

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$17,354,277 90 $56,950,395 68 $65, 191,972 53 $82,649,533 48 $73,156,116 SO

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