The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1906-10-24
STOP ALL LOSSES
Bank Commissioner Royce Takes
Important Step.
Adopts Mr. Breidenthal's Plan
to Protect DepOsitOrs.
MONEY IN TREASURY.
Fund Deposited By Bankers to
Guarantee Deposits.
Furnish a Legal Reserve Avail
able When Needed.
-ONEY IN TREASURY.

Bank Commissioner John Q. Royce
today announced that he will ask the
legislature which meets here in January
to enact 9. law which VIII absolutely
guarantee to all depositors in state
banks that they viii get their money
back in case Of a failure of the bank
The law amounts to sort of mutual
insurance, in which all the state banks
Of the state share in the expense. It is
practically the same plan which was
recommended IN 1898 by ex-Bank Come
missioner Jonn W. Breidenthai, and
which after passing the senate, came
within two votes of being enacted into
law by the house of representatives.
It is proposed that each state bank
shall deposit with the state treasurer
a sum equal to 5 per cent of the total
deposits of that bank. This money will
be loaned back to the bank at "a per
cent interest, or invested in government
bonds, and all the earnings viii go into
fund held by the state to protect de-
positors. Under this plan. the banks
unite in guaranteeing each others de-
posits.
Under the plan proposed, the income
from the per cent OF the total deposits
in state banks would amount to abous
$4,000 a year, with deposits at their
present size.
ttons for the new law:
There is at this time a bill before
the committee on banking and currency
Of congress covering this very question,
and which is calculated to guarantee de-
posits in National banks. This bill is
being perfected as rapidly as possible.
Is receiving converts every day, and
may, before the close of the next con-
gress become law. I refer to the his
tory of this proposed legislation to show
ff7a
state authorities.
Il believe that we have not only
reached a period In the history OF banls-
ing in this country when it is deSirable
that bank deposits be secured to the de-
positors, but we have reached time
when the legislatures of the several
states must act in this important mat
ter or their state departments viii be
government ana state banks viii cease
to divide the business Of the country
with banks under national authority
1.-THE history of attempted legisla-
ton along this line, which has been
very little is that it has met with its
greatest opposition from the large
banks which feel that they should not
be called upon to help build up com
petition for themselves. But as the
larger banks are becoming interested
in the small banks, either as owners
Of stock or as correspondent banks.
much of the opposition directed
against this proposed legislation he's
been Withdrawn. and its future path
way looks much smoother than that
over which it has Travelled.
ssIf the bill now before congress
should become a. law this winter, and
deposits in national banks be guaran-
teed to the depositOrs, state banks
would either go into the national sys-
tenn, suspend, or run without deposits.
for the depositor would put his money
in the bank where he thinks it the
safest In neither the national nor the
state plan is it proposed that either
the government or the state viii guar
antee bank deposits. The guarantee
must be made by the banks and de-
positors on the plan Of mutual iIl-
surance'
The plan advocated by Mr.. Royce
is that each bank under state super
vision shall deposit with the state
treasurer per cent of its deposits,
computed annually. The amount 50
deposited to remain part Of the legal
reserve of the depOsiting bank The
fund which these deposits create in
the hands of the state treasurer is to
be invested by being loaned back to
the banks, not to exceed $lO,OoO 70
any one bank, and to be secured by
fidelity bond. at a rate Of interest not
less than 2 q per cent per annun-
Any un1oaned portion OF the fund
shall be invested by the state treas
urer In United States bonds. All the
earnings viii go into the fund to guar
antee deposits In event OF failure Of
a bank. the receiver will exhaust all
the assets of the bank enforce the
double liability against stockholders
and then the bank commissioner VIII
draw his draft upon the guarantees
fund. and pay in fun ali the money
due depositors.