Western Kansas world. [volume] (WaKeeney, Kan.) 1885-current, 1897-01-09

oiHh ueDOSlGS anu pTdCUlCdlly put dn
end to bank failures. 1t ought to be
done by the United States, but it
might be done by the state of Kansas
The plan we have in mind is simple.
1t has been ascerUained by an expert
ence of many years that the total loss
to depositors.in national banks is less
than One-tenth of one per cent of the
whole amount of deposits. Much of
even this small loss is caused by pan
les, when depositors get scared and
rush to the bank to draw their money.
The bank is unable to collect from its
debtors fast enough to meet the sud
den demand, and sometimes fails even
when plenty of assets are on hand
Suppose that each national bank was
required to pay into a guarantee fund
to be held by the government, a tax
on its average deposit of one-tenth of
one per cent, as is shown by past eX-
perience, it would create fund am
pie to protect depositors. There
would be no such thing as a bank
panic or run because if every deposi-
tor knew that his money was safe he
would never worry about it. 1t would
prevent to a very large extent finan-
cial Stringency, because banks would
not be compelled to hoard money in
the vaults to guard against a run.
During the panic of 1898, 1894, and
1895, conservative banks good share
of the time kept from 60 to IS per
cent of their deposits on hand. This
meant that at least half the money in
the ITnitn6 Id
from circulation. OF course. there was
money famine. There couldn't help
being. Under we'll regulated sys-
tenn of guaranteed deposits nothing of
the kind would happen. In times of
panic banks press hardest on their
debtors. They have to do this as a
matter of self-preservation. They
have to do it in order to have money
to pay depositors on demand. If
there was no danger of rush of de-
positors for their money there would
be no need to press borrowers. But
the money that is hid away in the
vaults of banks in times of panic is
not the only money withdrawn from
circulation In times of panic people
lose confidence in banks and take out
their money to hide away. If the de-
poSltor knew that there was Sutfi-
cient guarantee fund held by the gov
ernment to secure every dollar of his
deposit there would be no hiding in
garretS and holes in the ground
Every man of ordinary common sense
would rather have his money in
bank if he knew it was safe. The
United States ought to do this bust
ness, but the state of Kansas can un-
dertake it on her own account. The
percentage of loss to depoSitorS in
state banks in Kansas has probably
not been any greater than to deposit
tors in national banks. Let the Ieyis-
lature which meets Tuesday amend
the banking law. First by requiring
a larger capital stock as recommend
ed by the bank commissioner: second,
require each bank to pay a guarantee
to be held by the state. tax of two
mills on the dollar on the average
amount of deposits. The tax could be
reduced after the first year. The re-
port of the bank commissioner shows
that on September 1, 1896, 392 state
and private banks in Kansas held de-
posits to the amount of S1I.360. .23S.II.
Ii deposits were guaranteed the de-
posits in state banks would probable
double. The guarantee tax of two
mills would be amply to protect the
state in her guarantee. The law
should also provide for closer and
more effective inspection of banks.
The result of such law would be
that Kansas would have the safest
and most satisfactory banking system
Of any state in the Union.