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NEBRASKA BLUE BOOK, 1920

415

BANKING IN NEBRASKA.

     The early banks of Nebraska were established by specific acts of the legislature, naming the incorporators, powers, capital and place of business.

     The first territorial legislature did not grant any bank charters, but it incorporated the Western Exchange Fire and Marine Insurance company, which by a liberal construction of its powers, became a bank. On January 18, 1856, the legislature chartered the Platte Valley bank at Nebraska City, the Fontenelle bank at Bellevue, the Bank of Florence, the Bank of Nebraska at Omaha, and the Nemaha Valley bank at Brownville. There was considerable hostility to "wild cat" banking, even then, J. Sterling Morton being one of the most pronounced objectors.

     The charters of these earliest banks were almost identical. The companies were made up of a very few persons, the capital stock was $50,000 or $100,000 with liberty to increase it to $500,000. The shares were to be $100, and one-half the capital stock in subscriptions was required for the commencement of operations. There was no requirement of any amount in cash to begin business. Power to issue bills, notes and other certificates of indebtedness and all banking powers were conferred. The stockholders were individually liable for the redemption of all the issues of the bank. An annual report of the condition of the bank was to be made to the territorial auditor find to be published in three newspapers of the territory. Efforts were made to throw further restriction on these banks but without effect.

     The third legislature was confronted with more than a dozen proposals to grant bank charters, and a conflict of a considerable proportion was engaged in. On February 13, 1857, the Bank of De Soto and the Bank of Tekamah were granted charters by the legislature. These and four other charters were vetoed by Governor Izard, whose position was sustained; in four of the six cases.

     In the fall of 1857, the financial panic spread from the east into Nebraska and all of the chartered banks failed.

     There were in the territory at this time a number of banks that were not chartered. These also had issued notes and bills. The chartered banks, with one exception, the Platte Valley bank of Nebraska City, were owned in other states.

     On February 12, 1857, an act which repealed "so much of the chapter third of the code in relation to corporations, approved January 25, 1856, as authorizes the incorporation of banks" was approved.

     On May 25, 1858, Governor Richardson directed James G. Chapman, district attorney of the first judicial district, to file information against certain banks, seven of which were operating without charters.

     Upon repeal of the criminal code affecting banking and the failure of the chartered banks, the banking business of the territory was carried on for some time by private banks. There were seven of these banks in the territory in 1865, though one of them had become a national bank, and the others likewise reorganized shortly afterward.

     The first general regulatory banking law was that approved March 29, 1889. The limitations upon banking corporations were chiefly the requirement of certain assets in excess of liabilities, the maintenance of certain reserves, provision for reports to the state auditor, and the inauguration of a system of bank inspection under control of the auditor, treasurer and attorney general. Savings banks also were provided for. Provision was made for the local publication of the required reports on the condition of the banks.

     An act approved April 8, 1895, created a banking board composed of this auditor, treasurer and attorney general. This act provided for the chartering

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416

NEBRASKA BLUE BOOK, 1920

of all banking institutions operating under state law by the banking board; also for inspection by and reports to the board. Quarterly reports were required.

     A general banking law, approved March 25, 1909, repealed the existing laws and provided for a banking board to consist of the governor as chairman, the auditor and the attorney general. Most of the provisions of the former act were retained; but certain innovations of importance were introduced. All banking institutions, except those operating under federal laws, were required to incorporate. The most conspicuous new feature was the guarantee fund required to be maintained by state banks. The constitutionality of this part of the law was questioned and adversely decided in the federal district; court, but finally adjudged to be constitutional by the United States supreme court in a decision handed down by Justice Oliver Wendell Holmes, January 3, 1911. It was contended that it was a violation of the 14th amendment to the federal constitution; in that it discriminated against private banks in forcing them either to dissolve or incorporate, and that it was unfair to deprive a solvent bank of any of its property to be applied to the private use of making good the losses of insolvent institutions. The supreme court held that the law was a legitimate exercise of the police power.

     The law having been sustained, the legislature of 1911 strengthened it by amendment. As amended the law provided for four semi-annual payments of one-fourth of one per cent of the average daily deposits and semi-annually thereafter one-twentieth of one per cent of the average daily deposits. This fund is kept by the banks subject to assessment, and is payable to the state board on demand. These payments are to cease when the depositors' guarantee fund gets above one and one-half per cent of the average daily deposits and to be resumed when the fund falls below one per cent of the average daily deposits.

     This act was amended in 1919 so as to require banks, which were not organized for transacting business prior to the passage of this act, to file complete and detailed reports of their condition within two years after the date of organization.

     The effect of the law has been to increase the number of state batiks. On November 1, 1918, there was a total of $1,883,697.92 in this fund.

     The first state convention of bankers was held at Omaha on January 22, 1890. The complete organization of the Nebraska bankers' association according to the group system was effected in 1900.

TABLES SHOWING DISASTROUS EFFECTS OF "HARD TIME"
YEARS IN THE EARLY 90's UPON NEBRASKA BANKS.
STATE BANKS.1

Year

Banks Failed
Total Number State Banks at End of Year
Deposits in Banks Closed
Total Deposits in All Banks

1892

7
513

$71,997

$24,891,113

1893

17
504

652,175

17,208,476

1894

8
482

197,283

18,074,832

1895

17
447

584,655

14,200,775

1896

36
414

1,156,888

10,227,537

Total

85
.....

$2,662,998

.....

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NEBRASKA BLUE BOOK, 1920

417

NATIONAL BANKS.2

Year

Banks Failed
Total at End of Year
Proved Claims Against Failed Banks
Dividends From Failed Banks
Total Deposits in All National Banks (Individual)

1891

4
139

$346,840

$165,018

$24,039,000

1892

.....
137

.....

.....

28,783,000

1893

4
134

1,823,837

445,338

21,272,000

1894

3
127

269,785

74,030

21,549,000

1895

5
117

377,008

127,793

17,994,000

1896

.....
113

.....

.....

17,037,000

Totals

16

$2,817,470

$812,179

.....

Net loss to creditors

.....
.....

.....

  2,005,291

.....

  

.....
.....

.....

$2,817,470

.....


     1Report of the Secretary of the State Banking Board, 1912, XVI.
     2Report of the Comptroller of the Currency, 1913.
TABLES CONTAINING DATA FROM WHICH TO DRAW CONCLUSIONS RELATIVE TO THE
VALUE OF BANK DEPOSIT GUARANTY IN NEBRASKA.

STATE BANKS.1

Date

Number of Banks
Capital
Loans
Individual Deposits

Nov. 27, 1908

628

$10,900,000

$55,700,000

$65,400.000

Nov. 16, 1909

662

12,000,000

66,000,000

71,700,000

Nov. 10, 1910

666

12,500,000

67,900,000

70,400,000

Dec. 5, 1911

669

12,800,000

67,500,000

72,200,000

Nov. 26, 1912

694

13,800,000

78,200,000

80,700,000

Oct. 21, 1913

714

14,400,000

94,900,000

89,300,000

Feb. 12, 1914

728

14,800,000

85,500,000

90,100,(00

May 16, 1914

737

15,200,000

87,900,000

89,800,000

Oct. .31, 1914

760

15,798,100

91,918,622

43,598,154

Nov. 20, 1917

920

21,056,300

187,868,975

223,499,266

Feb. 25, 1918

930

21,539,300

181,686,662

250,500,824

Nov. 1, 1918

934

22,210,800

204,879,228

239,815,362

Nov. 15, 1919

909

24,881,800

249,387,430

278,753,490

NATIONAL BANKS.2

Date

Number of Banks
Capital
Loans
Individual Deposits

Nov. 27, 1008

214

$13,500,000

$75,900,000

$73,000,000

Nov. 16, 1909

220

14,400,000

89,800,000

83,800,000

Nov. 10, 1910

238

15,400,000

92,100,000

86,400,000

Dec. 5, 1911

247

16,200,000

95,000,000

89,000,000

Nov. 26, 1912

243

16,200,000

103,600,000

93,400,000

Oct. 21, 1913

241

16,270,000

102,900,000

94,600,000

March 4, 1914

230

16,280,000

94,391,456

93,100,00

Oct. 31, 1914

218

15,795,000

94,418,868

83,382,579

Nov. 17, 1916

192

14,305,000

130,585,000

116,516,000

Nov. 1, 1918

191

16,300,000

159,119,000

201,456,000

Nov. 17, 1919

189

16,640,000

207,371,000

175,347,000


     1Report of the Secretary of the State Banking Board.
     2Report of the Comptroller of the Currency.
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