The Caucasian. (Shreveport, La.) 1900-192?, 1907-12-01
SENATOR BARRET'S BILL
4 Complimentary Review by the New
Orleans Item.

1
troduced a measure at Baton Rouge i'll
keeping with the clause i'll the recon-
mendatlon Ill Governor Blanchard's
message to the Legislature regarding
security for State deposits.
In expressing its approval Of the
| Governor call for an extra session, the
Item had i'll mind the excellent sugges-
ton contained for protecting State de
posts. }.
Under this programme Louisiana
would be following Texas. At the pres
ent time the State of Texas has nearly
a million and half dollars deposited in
Texas banks, and owing to the troubles
these banks are experiencing the State
can not draw out its money.
But the State is protected because it
holds approved securities from the State
depositarcs These securities are doubt
less State and city bonds or United
States Government bonds.
Senator Barrels bill aims at pro-
tecting the States deposits by requiring
the banks that seek such deposits to
place with the State approved bonds of
the cities, parishes or subdivisions of
the State of Louisiana, or bonds Of the
State itself.
| There are outstanding of such bonds
upwards Of thirty-six millions of dol
lars A great many of these are bonds
predicated upon the credit OF the city of
New Orleans. Consequently, the passage
Of this measure would help the city's
credit.
| One result of such a measure would
probably be to enable the city of New
| Orleans to bring out and float at par its
next section of drainage and sewerage
bonds. And unless this issue of bonds
is success, the city will doubtless be
| embarrassed to complete its sewerage.
water and drainage system.
AT any rate, the State of Louisiana
would be following the best of precedent
in adopting this measure for the protec-
tion-of its deposits 1t would be fol-
lowing the enlightened example of the
Federal government and the best prac-
tice for the protection of State deposits
now i'll vogue ill other States
The factor of safety should be the
first consideration with the States
moneys, that of interest should ge sec
ond. Money rates are high now, but
that means that they are high for good
loans; large premiums on money can al
ways be obtained for risky loans. So
the State should seek security 1t is
true that bonds may be given by solvent
institutions; but again the bonding COM
pany may be technical i'll case of default
on the part of State depositary.
| Tax Collector Dudenhefers bond re-
mains unsolicited to this day. The bond
company is protesting it. In caseaa State
depository went out of business, the
same rule might apply:
THE State can only award its depos-
its in two ways-either the administra
ton must have the discretion of award
ing to banks of its own selection, when
the Governor and his associates are
morally responsible, or the deposits
must go to those who bid highest for
them.
The latter policy has been deter
mined on. The Item believes it to be
wise one. But it is evident to anyone
who thinks moment that there might
be temptation for very small and
very weak bank to make the highest bid
for million and half deposits. The
assets and value of the guarantee of a
bonding company that would stand back
of such bank, the nature of its bond,
might not be investigated until after
! there arose occasion to investigate. And
| then it might be too late.
The Legislature should also care
fully consider the ACCESSIBILITY of di
vision of the State deposits. Any bank
with State bonds should be able to get
some Of the States money. Thus the
constant criticism and complaint that
arise from alleged discrimination as be-
tween depositaries an dthe tendency to
mix the banks i'll politics to the detr-
ment of all parties concerned, could be
avoided.
Finally, the attempt to confuse
finance and politics is wrong. A States
money should be awarded to depos-
itaries in accordance with sound bust
ness principles. A great business enter
prise often asks no interest on its de
posts. 1t seeks to establish credit-to
be able to get money when it needs it.
That is business. A State seeks credit
through selling its bonds So in award
ing it sdeposts to its bondholders, it
would be following the best business
precedent.
| SHOOTING INTO A RAILROAD
/ TRAIN.