, 1907-11-29
Mr.. Collins Letter.
Douelas. -Wyo. Nov. 26.

WIZ WIN ICkSSis
Douglas, Wyo, Nov. &c, 1907.
Mr.. w. E. Chaplin, Editor Republican.
My Dear Mr.. Chaplin:-Replying to
your favor of the Gath inst, / do not
feel equal to the task of clearly x
pressing my views on the subject of
government guarantee of national
bank deposits, although it is a subject
to which 1 have given much thought.
While quoted figures make very dry
reading, I believe a few figures, taken
from the comptroller's report in refer
ence to the depositors' losses from
failed national banks since they were
first started, in 1863, will show the
feasibility Of the plan better than any,
thing else than Ear be written. The
total number of national banks that
failed from 1868 to September, 1906
a period of forty-three years-was 46S.
The total net loss to depositors from
these failures amounted to a trifie less
than SAP, 500, 900. Had a law been in
force guaranteeing deposits all these
years, the expense to the government
would have been SO small, when COM
pared to the benefits, that 1t is scarce
ly worth mentioning. This, assuming
that the losses were paid by the gov
eminent without assessing banks.
A Very Small Tax.
There is no reason why the banks
should not be assessed, however. For
the forty-three years in question, to
have paid all depositors' losses 1t would
have required a tax on deposits of less
than one-twentieth of one per cent per
annum. We can only Judge the future
by the past. During these years we
had two panics-1S73 and 1S93-and
two periods Of depression. We should,
therefore. be safe in figuring that the
tax mentioned will pay all losses OF
depositors in national banks that fail
hereafter. I believe a large majority
of the country bankers would gladly
pay the required assessment for the
security they would get on their bal
ances with other national banks, IL for
nothing else.
The tax on the largest bank in Wyo-
ming would be less than $1,000 per an
mum; 1t would only require an increase
in deposits Of 3 per cent to Offset the
tax, figuring that the amount depos-
tied is worth 2 per cent per annum to
the bank. AS to increased deposits, l
think there is little question but that
the deposits of all national banks will
increase If a guaranty bill is passed.
Responsibility Of Government.
From a moral standpoint, there is no
reason on earth why the government
should not pay the depositors in a
failed national bank, in full, and at
once. The government issues the bank
a charter; examines the bank twice
each year; calls for statements five
times every year, and has these state
ments published in the local paper for
the depositor to read, The depositor
has a perfect right to think that the
government is carefully looking after
the bank and that his deposit is per-
fectly safe. 1t strikes me that your
Uncle Samuel should either be respon-
sible to the depositors or that the
word national" should be stricken out
of the name Of the bank.
believe a government guarantee
would settle our present difficulty.
Whatever the cause Of the trouble
east. the only trouble in the west has
been lack of confidence-not so much
on the part of the people as On the
part of the banks. The banks have
plenty of money and have had it all of
the time, but have been afraid to turn
It loose to be boarded or taken east.
A Change Of Front.
Put the government back Of the de-
posts and in thirty days the bankers
will be talking to their customers
about renewals and new loans in place
Of insisting, as we now do, that the
note must be paid at muturity.
1 do not agree with you in reference
to state banks. l notice that Mr.. Bryan
also mentions this in his plan. (By the
way, his plan is SO closely along the
lines of the one you and l agreed on
many months ago that 1t looks as
though you had given him a tip
believe that on the passage Of such
law state banks will become nationa
banks at once. In a recent converse
ton with Mr.. H. N. Callander, presi
dent Of the Bank of Lusk, a state bank
he told me that if a guaranty law !
passed he will turn his bank into
national. and l think the others vii