59TH CONGRESS, HOUSE OF REPRESENTATIVES. 2d Session. INCORPORATION OF BANKS IN THE DISTRICT OF COLUMBIA. JANUARY 25, 1907.-Referred to the House Calendar and ordered to be printed. Mr. KLINE, from the Committee on the District of Columbia, submitted the following REPORT. [To accompany H. R. 21669.] The Committee on the District of Columbia, to whom was referred the bill (H. R. 21669) to provide for the incorporation of banks within the District of Columbia, report the same back to the House with the recommendation that it do pass when amended as follows: Page 3, strike out all commencing with the word "that" in line 5 down to and including the word "Columbia" in line 15, and insert in lieu thereof the following: That from and after the first day of January, anno Domini nineteen hundred and eight, no person, company, association, copartnership, or corporation shall transact a banking business or maintain an office or banking house where deposits or savings are received, within the District of Columbia, except associations organized under the national bank act, corporations organized under an act of Congress entitled "An act to provide for the incorporation of trust, loan, mortgage, and certain other corporations within the District of Columbia," approved October first, eighteen hundred and ninety, except also any person, firm, or company regularly licensed to engage in the business of private banking in the District of Columbia prior to the first day of January, nineteen hundred and six, and corporations organized under this act. The amendment recommended above does not change the text of that portion of section 3 from its language in the bill as originally introduced, except it adds a provision exempting from the provisions of this measure the regularly licensed private banks which were in existence on the 1st day of January, 1906, but rearranges the subject-matter of that portion of the section so that the intention of the proposed law is made more clear. The general purpose of the proposed legislation, which was drafted by the Commissioners of the District of Columbia, on the recommendation of the Comptroller of the Currency, and has the unqualified approval of both the Commissioners and the Comptroller, is to place all classes of banking institutions in the District of Columbia under the same governmental supervision which the national banks, the trust companies, and savings banks are subjected to in the District of Columbia. The letter of the Commissioners giving reasons for the passage of this bill is as follows: OFFICE COMMISSIONERS OF THE DISTRICT OF COLUMBIA, Washington, December 7, 1906. SIR: The Commissioners of the District of Columbia have the honor to submit herewith a draft of a bill "To provide for the incorporation of banks within the District of Columbia," and to request its early enactment. At the present time the only concerns doing a banking business in the District of Columbia which are under governmental supervision are the national banks, the four trust companies, and the savings banks, which are all under the supervision of the Comptroller of the Currency. As to the savings banks, his supervision is limited by the terms of the act passed by Congress at the last session, placing them under his supervision, and his powers with respect to them should be enlarged. Moreover, in the judgment of the Commissioners, all other banking institutions receiving deposits and doing business with the public should be brought under his supervision. In the execution of the act passed upon the recommendation of the Commissioners at the last session of Congress, to bring the savings banks under the supervision of the Comptroller of the Currency, that officer has examined savings banks doing business in the District of Columbia, and in consequence of that examination two of the banks were closed by his order and have been dealt with in such a manner that the depositors will be saved from the loss of their savings, which they would otherwise have suffered. This is a practical illustration of the great value of such supervision and furnished the best argument for enlarging and extending the law. In the judgment of the Commissioners every concern doing a banking business in the District of Columbia should be incorporated under our laws and should be under the supervision of the Comptroller of the Currency, in order that it may be kept within legitimate lines of business, and the interest of the depositors and the general public may be safeguarded. The Commissioners have the support of the community in this view, and none are more emphatic in their expressions of approval than the reputable men engaged in the banking business. Very respectfully, Hon. J. W. BABCOCK, HENRY B. F. MACFARLAND, President Board of Commissioners District of Columbia. Chairman Committee on the District of Columbia, House of Representatives. The amendment which your committee recommends, exempting the regularly licensed private banks, was recommended by the Commissioners after the bill had been introduced. Your committee is informed that this provision will result in exempting from the provisions of the act four copartnerships which have been doing business in the District, one since 1856, and the youngest since 1890. These firms do not conduct a general banking business, do not receive savings deposits, the chief element of their business being for the convenience of their patrons for whom they make investments. Your committee is also informed that the Comptroller of the Currency approves this amendment, and they therefore believe that the bill herewith reported should be enacted into law. The Commissioners' letter on this subject is as follows: OFFICE COMMISSIONERS OF THE DISTRICT OF COLUMBIA, DEAR SIR: The Commissioners of the District of Columbia have consulted with the Comptroller of the Currency respecting the bill, H. R. 21669, Fifty-ninth Congress, second session, "To provide for the incorporation of banks within the District of Columbia," and in accordance with the result of the conference, have the honor to recom mend that the bill be amended by inserting after the word "ninety" in line 12, section 3, page 3, the words "any person, firm, or company, regularly licensed to engage in the business of private banking in the District of Columbia prior to the first day of January, nineteen hundred and six.' A copy of the bill, amended as suggested, is herewith transmitted. Hon. J. W. BABCOCK, HENRY B. F. MACFARLAND, President Board of Commissioners District of Columbia. Chairman Committee on the District of Columbia, House of Representatives. The following taken from the annual report of the Comptroller of the Currency for 1906, with reference to the act of Congress approved June 25, 1906, and urging legislation such as is involved in the bill herewith reported, will be of interest in this connection, and is hereby made a part of this report, as follows: SAVINGS BANKS IN THE DISTRICT OF COLUMBIA. In my annual report for 1905 attention was called to the necessity for legislation regulating banking in the District of Columbia, in order to secure to depositors in banks organized under authority of State laws and doing business in the District the same measure of protection that is afforded depositors in banks and trust companies organized under Federal laws. In line with this suggestion and the recommendation of the Commissioners of the District of Columbia, an act was passed and approved June 25, 1906, placing under the supervision of the Comptroller of the Currency all savings banks, savings companies, trust companies, and other banking institutions organized under any act of Congress or by virtue of the laws of any of the States having an office or banking house in the District of Columbia for the receipt of deposits or savings. Previous to this enactment the only banking institutions in the District of Columbia under official supervision were the national banks and trust companies organized under acts of Congress. Banking_institutions doing business in the District, but organized under authority of State laws, were subject practically to no official supervision whatever-Federal, State, or District. When the act of June 25, 1906, went into effect there were 14 institutions of this class operating in the District of Columbia. Six of these were incorporated under the laws of Virginia, six under the laws of West Virginia, one under the laws of Connecticut, and one under the code of laws for the District of Columbia as amended by the act of June 30, 1902. On September 4, 1906, the date of their first report of condition made to the Comptroller under the above-mentioned act, 13 of these institutions showed deposits aggregating $4,191,739. Banking institutions having offices or banking houses in foreign countries as well as in the District of Columbia being required by the act mentioned to make and publish semiannual reports only, no report was received from the International Banking Company, the only institution of this class having a banking house in the District. All of these institutions were examined during the past few months by a nationalbank examiner. Two of them were found to be insolvent, and were immediately closed and placed in the charge of receivers, namely, the Aetna Banking and Trust Company and the Peoples Savings Bank. The first-named company was organized under the laws of West Virginia May 14, 1901. Its principal office was located in Butte, Mont. It operated a branch in Washington, D. C., and was reported as maintaiuing another in New York City. An examinination of the Washington branch disclosed a condition of hopeless insolvency, and immediately upon its being closed by the Comptroller the parent bank at Butte suspended business. A receiver was placed in charge of each bank by the Comptroller. No books or assets whatever were found at the New York office. The liquidation of this concern has not progressed far enough to enable an accurate statement to be made. What disposition was made of the funds or who is responsible for their disappearance has not yet been determined, but apparently the bank has been looted by its officers, and the prospects for any material returns to the depositors and other creditors are very discouraging. The failure of this bank affords a striking illustration of the urgent necessity for more adequate legislation regulating banks of this class operating in the District of Columbia, and providing for the punishment of offenses committed against the banking laws. The supervisory powers conferred upon the Comptroller over institutions of this kind by the act of June 25, 1906, are insufficient, as they only give him authority to require them to make and publish sworn reports of condition, to cause an examination to be made into their affairs whenever he may deem it necessary, and to take possession of and appoint a receiver for any such institution for the same reasons that he is authorized to take possession of and appoint a receiver for a national bank. If the capital stock of any such bank becomes impaired by losses or otherwise, he has the power to require the impairment to be made good within a stated time under the alternative penalty of liquidation or receivership. If an examination discloses a condition of insolvency, he may close the bank's doors, take possession of the institution, and appoint a receiver to wind up its affairs; but there is no law, Federal or District, regulating the conduct of the bank's business or empowering the Comptroller to correct abuses or dangerous practices which jeopardize the safety of the institution and ultimately result in insolvency and irreparable loss to depositors. The provisions of the national banking laws covering crimes and misdemeanors do not apply to these banks, and no adequate laws of this nature are provided by the District Code. The remedy recommended for this condition of affairs is the enactment of a law requiring banks and banking companies of this class to incorporate in the District of Columbia, instead of permitting them in the absence of such a statute to operate under charters obtained from neighboring States, which do not appear to retain any control or to exercise any supervision over them. All institutions of this kind in operation in the District of Columbia at the time of the approval of the proposed act should be required to reincorporate under its provisions within a stated time or to cease doing business in the District. O SUPREME LODGE OF THE KNIGHTS OF PYTHIAS. JANUARY 25, 1907.-Referred to the House Calendar and ordered to be printed. Mr. TAYLOR, of Ohio, from the Committee on the District of Columbia, submitted the following REPORT. [To accompany H. R. 17212.] The Committee on the District of Columbia, to whom was referred the bill (H. R. 17212), to amend an act to incorporate the Supreme Lodge of the Knights of Pythias, report the same back to the House with the recommendation that it do pass. Section 2 of the act approved June 29, 1894, reads as follows: That the said corporation shall have the power to take and hold real and personal estate, not exceeding in value one hundred thousand dollars, which shall not be divided among the members of the corporation, but shall descend to their successors for the promotion of the fraternal and benevolent purposes of said corporation. The purpose of the proposed legislation is to remove the restriction from the above section, which limits the corporation from taking and holding real and personal estate in excess of $100,000, so that they will be empowered to take and hold such an amount as will be necessary for the proper conduct of the corporation. Your committee has been informed that the large and steady growth of this order since its incorporation by Congress, in 1894, thirteen years ago, makes the removal of the restriction absolutely necessary. As this corporation exists by virtue of an act of Congress, any change in its charter can only be had by Congressional action, and as the purposes of the organization are fraternal and benevolent, your committee believe that the legislation herein reported should be enacted into law. This measure was referred to the Commissioners of the District of Columbia, whose report is as follows: OFFICE COMMISSIONERS OF THE DISTRICT OF COLUMBIA, DEAR SIR: The Commissioners of the District of Columbia have the honor to state with reference to H. R. 17212 of the present session, "To amend an act to incorporate the Supreme Lodge of the Knights of Pythias," which was referred to them at your instance for their examination and report, that they have repeatedly written to representatives of the organization mentioned for a statement of the special H R-59-2-Vol 1-35 |