Arizona republican., 1907-12-09

applies only to banks that are placed | in the hands of a receiver after the passage of the bill.
 Sec. 8. Section third provides that creditors for borrowed money shall not
 be considered depositors, and shall not
 be entitled to any payment out of the
 deposit insurance fund. It must be
 clear to any one that should these creditors be included, there might be
 danger of banks extending their lia- bility by issuing their own promissOry
 notes. if the public were assured that these obligations were protected by this
 insurance fund. For that reason, it is
 especially provided that creditors for
 borrowed money shall not be consid-
 cred depOsitors.
 See. 4. Section fourth provides for
 the investment in bonds issued or
 guaranteed (principal or interest," by
 the government of such part of this fund as the comptroller shall deem expedient.
 Sec. 3. Section fifth provides that 1t shall be unlawful for any national
 bank to advertise that their deposits
 are insured by the United States gov
 ernment."
 The wisdom Of this provision must
 be apparent to everyone. the govern
 ment is in no way connected with thIs proposition except as custodian of the fund. The government makes no
 pledge, assumes no responsibility, and
 is not a guarantor in the most remote degree. For that reason, 1t was | thought best to provide that no ad- vertisement or public no.ices should
 be given. which would lead the public
 to think that the government was in | any way responsibue for the payment
 of these deposits.
 This proposed amendment is from l first to last in the interest of the de- | positors.- Stockholders VIII be bene-
 fitted and all national banks will be strengthened. but the bill is for the depositor. and it must be clear to ey- cry one that the government is very jealous Of the depositor's interest. Before. a new bank opens it's doors
 the comptroller sends an examiner and for this service assesses the banks
 from twenty to seyentyfive dollars.
 Lated he sends a bank examiner once or, twice each year and assesses banks from twenty dollars upwards, even as high as two or three thousand dollars per annum for these combinations. This is clearly in the interest of de-
 positors and the law provides that be-
 fore depositor shall lose a dollar stockholder must lose his stock twice. Depositors may lose some interest, but they cannot lose their principal under
 this amendment.
 The danger which some believe they
 See in the adoption of any amendment which will insure the deposits of na- tional banks seems to me to be very remote and in my judgment business conditions would not be disturbed in the least. The strength and prestige which will naturally come to the na- tional banks will be noticeable only after lapse of some months or per haps years Some fear that bankers will be less careful in making loans. others fear reckless and injudicious | management for the simple reason that
 their deposits are secure. To my mind
 this Is a danger which is too remote to be considered seriously. The stock | holders must first lose their dividends
 or loses continue. the stockholders and directors all lose their original stock.
 and are required to pay an assessment of 100 per cent before this fund can be drawn upon for the payment of any amount due depositors; then as an additional safeguard national banks
 make seven reports every year and are
 examined at least once. l can con- ceive of no banker who would be per-
 suaded to adopt this policy for so re- | mote possibility of gain. Others fear | that the national banks would multi | ply so raDidlV that the whole buSinaSS
 would be disorganized. To this I reply that the banking business TOT national
 banks has been reduced to a very mar
 row margin of profits and is not es- l pecially attractive to any large per
 centage of capitalists. While the num-
 Der would undoubtedly increase more
 rapidly than in the past, by new
 banks, and also by the conversion of