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BANKING

347

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 eat" 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 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 and 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 18, 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     On February 12, 1857, an act which repealed "so much of the chapter third of the code in relation to corporations, approved January 25, 1856, as authorizes the incorporation of banks" was approved.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

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348

NEBRASKA BLUE BOOK, 1930

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 the auditor, treasurer and attorney general. This act provided for the chartering 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.

GUARANTEE OF DEPOSITS IN STATE BANKS

     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 law, were required to incorporate. The most conspicuous new feature was the guaranty fund required to be maintained by state banks.
     The failure of many banks in 1921 and subsequently led to the creation by the legislature of 1928 of the "guaranty fund commission". Most of the duties formerly discharged by the banking department in the matter of failed and insolvent banks were delegated to this commission. It operated until 1929, when the legislature abolished the commission and returned its duties to the banking bureau. This legislature also provided for a special investigation into the banking situation. Former Governor A. C. Shallenberger was appointed by Governor Weaver to conduct this investigation. The findings of the investigation were published in the summer of 1980.
     A special session of the legislature in March, 1930, repealed the guaranty of deposits law.

STATISTICS

     State banks, June 29, 1929: Number of banks, 688; bank failures in past year, 27; capital of all banks, $18,091,000.00; surplus, $5,847,713.89; deposits subject to check, $106,777,400.00; savings deposits, $112,592,589.89; total deposits, $219,369,990.66.
     National banks, October 81, 1929: number of banks, 162; bank failures in past year, 4; total deposits, $218,518,000.00; total resources, $259,858,000.00.

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BUILDING AND LOAN ASSOCIATIONS

349

BUILDING AND LOAN ASSOCIATIONS

     The earliest building and loan association of record was the Omaha building and loan association, incorporated by legislative act approved January 12, 1860.
     The first building and loan law was called a mutual loan association law and was approved February 18, 1878. This act was repealed by an act approved March 81, 1891. The articles of incorporation, constitution and by-laws of these associations were to be approved by the auditor, treasurer and attorney general, or any two of them, and annual and any other required reports made to these officials by the associations. An act approved April 4, 1899, placed building and loan associations under the control of the banking board.
     No reports are available prior to 1892. Detailed information subsequent to the law of 1891 may be obtained from the biennial building and loan report made to the banking department.

STATEMENT OF TOTAL NUMBER OF BUILDING AND LOAN ASSOCIATIONS
IN NEBRASKA. NUMBER OF SHARES IN FORCE AND TOTAL
ASSETS. FROM 1892 TO DATE
(From Reports of State Banking Department)
Years
Number of Associations
Number of Shares in Force
Total Assets
1892
71
46,012
$ 2,902,557
1893
84
61,964
3,653,096
1894
86
11,231
3,888,001
1895
81
70,615
8,929,778
1896
73
64,891
8,771,888
1897
68
67,697
8,554,788
1893
64
79,978
3,428,728
1899
60
89,492
8,882,781
1900
60
105,625
8,697,356
1901
59
119,585
4,314,744
1902
68
130,083
4,758,298
1903
59
163,424
6,343.429
1904
60
174,022
6,217,350
1905
59
196,030
7,269,297
1906
61
220,648
8,961,788
1907
66
815,872
11,422,890
1908
70
438.054
17,094.771
1909
68
872,826
13,416,822
1910
70
512,344
21,827,766
1911
69
602,159
24,885.286
1912
68
668,122
28,946.105
1913
70
740,925
32,746.726
1914
72.
816.671
37;138.413
1915
71
891,333
41,660,870
1916
72
1.007,346
47,917,847
1917
73
1,122,618
54,646,629
1918
78
1,190.784
57,151,545
1919
74
1,866.423
66,768.069
1920
74
1,917,U2
77,989,337
1921
76
1,693,747
84,071,018
1922
80
1,906,856
91,994.729
1923
82
2,128,081
108,798,000
1924
84
2,398,889
128,021,650
1925
84
2,795,564
141,485,902
1926
83
3,056,562
153,128,474
1927
83
8,848,806
155,213,560
1928
84
8,624.489
161,898.927
1929
83
3,625,382
163,460,864

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350

NEBRASKA BLUE BOOK, 1930

LEGAL RATE OF INTEREST

     An act approved on March 14, 1855, fixed the legal rate of interest at "ten cents on the hundred by the year." An act approved January 7, 1861, fixed the rate of ten per cent, unless a rate not to exceed fifteen per cent had been agreed upon. The maximum rate was lowered to twelve per cent by an act approved! February 7, 1867. The law now in force was approved February 27, 1879. It places the legal rate at seven per cent, with a maximum of ten per cent.

INSURANCE

     The first insurance company to incorporate in Nebraska was the Franklin insurance company, which was authorized by legislative act approved March 15, 1855. The incorporators were J. W. Paddock, W. M. Hathaway, J. B. Ellsworth, William Kempton, Experience Estabrook, William Corfield and J. W. Richardson. This company was authorized to transact all sorts of insurance business. On February 12, 1857, the Platte Valley insurance company of Bellevue and on the following day the Nebraska City insurance company were chartered.
     The first attempt to regulate insurance companies is found in an act approved February 15, 1864. This act related only to fire and marine insurance and required semi-annual statements to be filed with the territorial auditor and the county treasurer of the county where the company was located. Companies were also required to obtain from the territorial auditor certificates of right to do business in the territory. The revised statutes of 1866 applied these provisions to all insurance companies.
     An act approved February 25, 1873, and which applied to all forms of insurance companies except life insurance companies, restricted companies to one of five specified forms of business. It empowered the state auditor, in his discretion, to have any insurance company inspected. It also fixed the auditor's fees for certification, filing semiannual statements, and inspecting. The auditor was required to tabulate the statistics of insurance companies and submit them with his regular report.
     From 1864 to 1913 regulation of insurance business in Nebraska was a part of the work of the auditor's office, except during part of 1899, when a legislative act created a separate bureau of insurance. This act was declared to be unconstitutional by the supreme court.
     In 1913 a complete insurance code was enacted, and a separate insurance board created. Under the civil administrative code this has become the bureau of insurance under the department of trade and commerce. The legislature of 1917 established a state hail insurance bureau.
     The total premium income of all insurance companies in 1929! amounted to $56,306,497. The total losses paid to policyholders amounted to $21,846,757.

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MERCANTILE FAILURES

351

MERCANTILE FAILURES
(Figures compiled by The Mercantile Agency--R G. Dun & Co.
Through courtesy of S. Vaughn Griffin, District Manager. Omaha)

Years
Number
Assets
Liabilities
1898
848
$1,609,995
$2,210,613
1894
282
880,739
1.262,473
1895
284
1,869,040
2,088.060
1896
180
949,625
1,046,177
1897
70
360,638
446.861
1898
78
229,950
269,468
1899
62
206,922
881,885
1900
70
208,886
462.069
1901
48
60,421
189,856
1902
100
850,776
1,004,436
1903
97
160,101
884,206
1904
96
194,165
418,660
1906
69
280,748
784,410
1906
80
280,114
479,093
1907
64
860,728
'186,178
1908
54
230,604
860,668
1909
127
605,716
1,144,405
1910
92
411,480
689,654
1911
129
600.909
978,712
1912
158
811,080
1,127,888
1918
122
878,667
1,712.729
1914
109
602,120
961,955
1915
177
1.204,058
1,711,393
1916
147
662,125
1,049,782
1917
118
636.825
1,087,747
1918
72
666,180
1,086,842
1919
61
326.126
599.104
1920
37
4,642,419
4,521,510
1921
229
6,888,109
10,742,531
1922
258
3,787.690
5,842,008
1928
211
8,546,344
3,753,760
1924
172
7,183,077
11,808.882
1925
158
1,081,164
2,083,006
1926
169
711,406
2,162,257
1927
248
1,427,708
2,631.908
1928
220
846,176
1.788,636
1929
254
2,677,512
4,243,633
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