SIGNIFICANCE OF BANKING SITUATION IN COLORADO 59 



ally responsible in double the amount of the par value of the stock owned 

 by them.^ The law of 189 1 says the stockholders in trust companies shall 

 be liable to the amount of their stock and in addition thereto. What 

 the phrase "in addition thereto" means has not been settled. It may 

 mean that the liability of the stockholders is unlimited. If such be its 

 meaning it is bad as it will tend to check the growth of credit institutions. 



Again, in the matter of limiting the loans to any one person, firm, or 

 corporation, the law should be changed. Banks may not loan more than 

 25% of their capital in this way.^ Savings banks and trust companies 

 are not hampered by law in the amount of such loans. 



The most serious defect in the banking laws of Colorado is the absence 

 of supervision. As has been already pointed out, the people of the West 

 are self-reliant. They do not look with favor on government control. 

 There is a feeling that each citizen can look out for himself. It is difficult, 

 however, for each individual to look out for himself in so important a 

 matter as banking. The state has taken over the coinage of money 

 because it can secure a good money system with less difficulty than any 

 individual, no matter how self-reliant he may be. So of the banking 

 system. The state can by a careful supervision of the banks save energy 

 for the individual. To attain their greatest usefulness banks and trust 

 companies must secure the maximum confidence of the public. The 

 danger of bank failures must be reduced to a minimum. Frequent 

 examinations are an aid to good bank management. Thirty-five states 

 and territories require examinations of their banks and trust companies ; 

 some annually, some twice a year.^ There seems to be a growing tend- 

 ency to require two examinations a year. State examinations of credit 

 institutions has become a settled principle of American financial 

 policy. 



A state superintendent of banks is an important officer and the manner 

 of his appointment is not easy to decide. Above all things this office 

 should be kept out of politics. The national bank examiners are 



' Laws of 1885, p. 264, § I ; Mills' Statutes, § 533. 



'Laws of 1885, p. 51, §1; Mills' Statutes, §223. 



^Arizona; California; Connecticut; Delaware; District of Columbia; Florida; Georgia; Illinois; Indiana; 

 Iowa; Kansas; Louisiana; Maine; Maryland; Massachusetts; Michigan; Minnesota; Missouri; Montana; 

 Nebraska; New Hampshire; New Mexico; New York; North Carolina; North Dakota; Oklahoma; 

 Pennsylvania; South CaroUna; South Dakota; Texas; Utah; Vermont; West Virginia; Wisconsin; Wyoming. 



