The Farmington times. (Farmington, St. Francois County, Mo.) 1905-1926, 1908-10-09

= iHpuNslbie To secure legislation protect
j. | ing banks from their own officials anc
0 directors. Why? Because there has
Q been no mutual responsibility. When al
banks become liable for the deposits OF
'ach' the stockholders Will insist upon
the enactment Of law making II q
. criminal ofense for a bank official tc
, loan more than the prescribed amount
. to on" individual. At present we have d
! law prohibiting the loaning Of more than
2 ohe-tenth OF the capital and surplus 10
one person or corporation, but the law
! Is Only directory. or course. the CONN
ttoItf can suspend Il bank II 1t violates
,he Jaw out the law is not enforced.
: because the enforcement Of such n law
would throw the punishment unon in.
: hoccnt stockholders and upon the com.
ihuhitY, since the suspension OF a bank
, I'M w. Il great loss upon stockholders
town IN which the bank ls located
inc law should make II criminal OF.
lense TO loan more than the prescribed
i,Iuni 70 one person, and we would
or q law prohibiting market specuIot lion
by bank officials ~ ~"''' ''''
me Oklahoma plan liz working salts
iiaSSoorliy' a bank recently failed In Ok
yer the notice OF suspension. the OFFICER
IN charge had authority to nav all de-
poSltors, and then the banking board
proceeded to collect the assets Of the
nank and to prosecute the officials crirni-
many Wien the business was closed IN
the stockholders passed resolution
thanking the state board for It's prompt
nct!oh. the action OF the board being n
! projection to the stockholders, ms we'll as
orally '''o puo'ic gem
Compare this failure under the euarantv
aSsten win failure where there IL no
| guaranty. In Oklahoma the bank rom,
| missioner telephoncd the farmers 10
come In and get their money, and the
n WaS Il am busy today with my.
efup VIII be IN in day or two"
IN Cleveland Ohio, IA bank failed about
me same time, and the papers nnnounced
| Twelve hundred infuriated Italians
stormed the closed doors Of the busted
nOanhlng house OF Costan Liopea, on
Vrhnse street, today. The police drove
the crowd back" "''
An objection is sometimes nade N tho
Guaranty law that new bank would
able TO promise its depositors ahso,,,t anu
security through the glIaraniv law cnt,id
draw the deposits away from consorva-
b bEs,S man managed banks by Offering
hlBncr rate OF Interest than the lattar
could pay. This objection ia ureaa az ~
IL were an unenswerabe one But let
W see how easily II can be met sine
thhe law makes all Of the banks liable Tor
w obllghuuns OF each bank tho Inv
should prohibit any abuse ~ tbis en
curIty by any bank, and In Oklahoma tho
Dahklng board has already fixed the rntc
al interest that can be paid to deposItors.
=, banking
board no bank IL permitted TO nav mnre
thail three per cent on short-tIme do .
posts or more than four per cent on
TINE deposits running for six months or
1t has also been urged az nm ohiactIo, |
uat under the guaranty system a biz
bank would have no advantage over n /
Iittie oank. Even II this argument were
SOUND, II could not weigh against the ad- |
vantagcs OF the system, for banks ara
made Tor the people, not the people for
the banks. While there are Advantages
IN having big banks, the advantages are
NOT snHlcient to Justify the jeopardlzing
OF the depositor or OF the business in
terests OF a community.
But. as matter of fact, the big hank
" WOULD sun have several advantages over
the small one. In the first place, II could
nuke larger loans than the small bank /
for instance. u bank with 81, COO 900 can't
,a ana no surplus could, as at present.
with 800. COO capital and surplus couid
only loan $40. 900 to one person. This nd
vantage would in itself draw TO the large
PUNK the large deposits and the men do
ing business upon q large scale for do
posits follow accommodations
Ihen, too. there Ia a certain husInass
tiuVahtage In depositing with n big bank.
u u Is worth something to be able TO refer
hg Is being investigated, and worth ain
more to have the advice OF a man ~
arge business experience when business
isfh are being considered
Besides these, there is a social advap-
age IN being on good terms with the |
men VINO are prominent in the banking :
vorid; Surely the big banks prestige
VII pe worth enough to It under the
warranty system; II should not begrudge !
ne smaller banks the advantage which /
hem. "''' '''"s W t
! can not pass from this subject with
ny referring to the fact that the big u
needs uFttN v
,ttle one, for big banks fail as well as J.
man banks, and the bigger the bank the ~
L ,baI me calamity to the community
men u iaiis. No bank Is so big as to
9 absolutely beyond danger, and n o
Immunity needs protection against the Il
" banks failure even more than against s
ne failure OF the small banks. $
-, =. nus sometimes been objected that =
10 ohhklng business a lower class OF q
zen ana reduce the average in character. II
1 ~ ,he contrary, the guaranty of de- u
p fyn submit. would. II It made any g.
lnklng business better class of men Y
no raise, II that is possible, the aver u
&c acr Oh character in II Is not to mans ~ ~
his fellow men should lose money on u
: account. Is II not mark nf char 81
TER that man should be careful of M
= good name and consderate OF the a. n,
teen OF his fellows7 At present n sue ~
sstui farmer or business man may be 3.
duced TO take stock in n bank, II NAV III
that his name is desired to give "a
anding and credit to the bank. but ~
en- a man Is constantly haunted by the ~ ~
ar mat a bank official may be guilty IN
criminal conduct which will bring the 10 10
NIX into insolvency. 1t is even possible SSe
at the banks assets may be entirely IA
ssipated. and that the honest citizen, u,
40 mas become stakeholder NAV VI
her be compelled to go beyond his RI
sal liability or meet the bitter criticism rit
the depositors who have suffered nv ~
3 failure. Would Il not be worth IN
netting to the stakeholder, in peace ga
mind to know that the maximum OF 90 "a
:, loss would be the value OF his stock Sa
q the 100 per cent liability, and that ga ga
depositor could lose anything? I am al a.,
WINGED that the guaranty OF deposits W. W.
uld not lead to degeneration in tho sua
rsonnel OF the bankers. hhe o
o Justify law guaranteeing depost- en-
., IL IN not necessary to show that the ba
vantage to the bankers would amount all
more than the tax. The examination 7
me banks would continue to be made ba,
the expense of the banks, even n II ~
re certain that the examination was in s
no pecuniary advantage to the banks. aia
0 law would continue to require n cer- a an
n amount of reserve to be kept on IT, M,
ID, even II II were certain that such ins
aw brought no pecuniary gain To the ''.s
TX and so the banks ought TO be v
npelled to insure their depositors qui
10 str