Arizona republican., 1907-12-09

. American banking. for every banker knows that if the spirit and the letter of the law had been consc!entiously ob- served. there would have been few fail- ures. and probably no loss to depositors but we face d condition, not a theory for in 1906 twelve banks were placed in the hands of receivers. Of this number however. four resumed busi- ness, two paid 30 per cent and two 100 per cent within short time. While this Is a creditable showing 1t must be admitted that the failure of any bank injures every other bank in it's Vincin- ity, and destroys the confidence of ev- cry one who is effected directly or in- directly by the failure. Upon the oth- CT hand. when We consider the colos- sal aggregate of business transacted by the national banks during the past for ty years. the percentage of loss is very samll.
 Some bankers in opposing the bill ar que that the government should keep out of the insurance business" Upor | this point. I fully agree with them. The government must not assume any greater obligation than 10 pay out what money has been paid into the hands of the United States treasurer who is 10 be the custodian of this fund. but I contend that the government has right to supervise so sacred a trust as the deposits in national banks. The bill requires nothing more than that the government shall receive and dis tribute this fund. Some demand that this bill should provide for the payment of depositors immed. d.ately upon the ap- pointment of receiver. but this might call for large amount of money. and the assessment required would be so large that it would defeat the bill. It will be noticed that the assess ments are based upon capital stock. It would in my judgment be an injustice 10 the larger banks to make this as- sessment a certain percentage of their capital. for if a bank with a capital of fifty thousand dollars pays one hun dred and fifty dollars the same pro rata assessment would demand three thousand dollars from a bank with a capital of one million dollars, and an assessment of less than one hundred and fifty dollars would not produce a fund large enough to meet possible contingencies. As there are over sixty
 
 posed assessment will bring to the | treasurer about eleven hundred thou sand dollars. This is more than the average loss to depositors and other creditors since 1863, (page 352. 1906 ] The losses provided for in this bill are for depositors only, and the amount required will be much less than the average loss to depositors during the laH forty years. for We are certainly drifting toward higher ideals; the in ! creased efficiency in the comptroller's department, an increased experience of bank examiners, and d greater sense Of responsibility by bank directors. have reduced the percentage of loss of national bank depositors to the mini mum. Twenty years ago. the insur- ance of national bank deposits would have been impossible, the number of banks was too small. ana the losses too great. today it is as simple as the insurance of your life or your home because there are over sixty-rfve hun dred national banks to share the cost a great Cooperative Protective Asso- ciation."
 It has been suggested by many. | that these assessments being in the in terest of depositors, should be a cer- tain percentage Of the deposits. This also would be an injustice to the larger banks. Assuming that the aggregate of all national bank deposits exceed six thousand millions of dollars. it would require an assessment of one | flftleth of one per cent per annum to create a fund which would be large enough 10 provide adequate protection for the depositors. At this rate a small bank separated from any money center with a deposit of s100,O0O would pay but S2O per annum, while d city bank surrounded by strong friendly institu- tons having a deposit of ten millions would pay two thousand ($2.00) doi- l lars annually. That the cost in either case noted, is out of proportion to the 1 benefit, does not admit of argument
 Some have suggested that it would be better to try a system of independ- ent insurance, which could be sold by an independent company to depositors This to my mind would be disastrous The solicitors who would insure bank deposits must first undermine the de- positor's faith in his bank, he must create a suspicion that the depositor', bank may fail and he lose his money To prove this, to fortify his position he will have an array Of bank failures defalcations and losses that might cause a run in itself. Deposits undel this kind of education will decrease not increase. Shake the confidence o community in its banks and you de
 stroy the foundation of all credit anC all commercial activity. This is nc imaginary danger The inquiry nat
 urally follows who would insure tn, I insurance company? The most i'm. practicable feature however, of outsid,
 insurance would be that it woult reach only a very small fraction of tn
 depositors, this amendment reaches ev
 cry depositOr. A prominent suret-
 company has already advertised {,
 guarantee deposit accounts in selected
 banks at five dollars (s5.OO) per on
 thousand (sl,000 dollars per annum At this rate the premiums woul,
 amount 10 thirty millions of dollars fo
 national bank deposits alone and no
 one depositor in 100000 would be in
 sured
 Sec. ?. Section second leaves the ap
 pointment of receivers and their du
 ties entirely unchanged, but require
 the comptroller of currency in his dis
 erection within two years 10 pay tn
 entire amount due depositors whicl