Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1908-10-08

" 1G(AIG AEElEldllQn DEOLaCl
Ing banks from their own officials an
directors. Why? Because there hs
oeen no mutual responsibility. When a
banks become liable for the deposits q
each, the stockholders will insist upo
the enactment Of a law making 1t
criminal offense for a bank Official I
loan more than the prescribed amour
to one individual. AT present we have
law prohibiting h loaning of more tina.
one-tenth OF the capital and surplus I
one person or corporation, but the lay
Is only directory. OF course, the CONN
troler can suspend a bank il IT violate
the Jaw, but h law Is not enforced
because the enforcement of such a Law
would throw. the punishment upon in
nocent stockholders and upon the com
munity, since the suspension of a banl
lnnicts a great loss upon stockholder
ano oisturps the business of the city o
town IN which the bank Is located.
The law should make it a riminaI of
tense TO loan more than the prescribe,
I amount to one person, and we wouIt
PROBABLY be able to secure the passag,
~ z law prohibiting market Speculation
The Oklahoma plan is working salts
! iactorify. A bank recently failed in OK
] lahoma; within forty-eight minutes AZ
ter the notice Of suspension. the office,
"a cnarge mad authority to pay all de,
positors, and then the banking boarS
proceeded to collect the assets of thu
bank and to prosecute the officials crimi.
nally. When the business was closed I'm.
the stockholders passed a resolution
thanking the state board for it's prompt
action, the action of the board being a
protection to the stockholders, as we'll as
orally. seA
Compare this failure under the guaranty
system with a failure where there is nc
guaranty. In Oklahoma the bank com
missioner telephoned the farmers to
come In and get their money, and the
answer was. 4 am busy today with my
crop; l will be IN in a day or two"
tha S!eve,a a OHIO, a bank failed about
twelve hundred Infatuated italians
stormed the closed doors of the busted
banking house of Costan Liopea, on
Orange street, today. The police drove
An objection is sometimes made to the
guaranty law that a new bank would
start up across the street" and being
able to promise its depositors absolute
security through the guaranty law, could
lively managed banks by Offering a
higher rate of interest than the latter
could pay. This objection is urged as If
1t were, an unanswerable one. But let
US see how easily it can be met. Since
the law makes all of the banks liable for
the obligations of each bank, the law
should prohibit any abuse of this Sc
curlty by any bank, n in Oklahoma the
ankln board has already fixed the rate
OF interest that can be paid to depositors.
according to the rules of the banking
board no bank is permitted to pay more
tnan three per cent on short-time de-
posits or more than four per cent on
time deposits running for six months or
more.
1t has also been urged as an objection
that under the guaranty system a big
bank would have no advantage over a
little bank. Even if this argument were
sound, it could not weigh against the ad-
vantages Of the system. for banks are
TOT the people,, not the people for
the banks. While there are advantages
IN having dig banks. the advantages are
not sufficient to justify the ieopardizing
or the depositor or Of the business in
terests of a community.
But, as a matter of fact. the big hank
would still have several advantages over
the small one. In the first place, it could
make larger loans than the small bank.
70 instance, a bank with 81, 600, 900 capt.
tai and surplus could, as at present,
with 500, 900 capital and surplus could
"a $40, 900 to one person. This adj
vantage would in itself draw to the large
bank the large deposits and the men do
ing business upon a large scale, for de-
pos1ts follow accommodations.
Then, too. there is a certain business
advantage In depositing with a big bank.
1t is worth something to be able to refer
10 a big bank when ones financial stand
ing Is being investigated, and worth still
more TO nave the advice of a man of
business experience when business
enterprises are being considered.
Besides these, there is a social advan-
tage in being on good terms with the
men VINO are prominent in the banking
Surely the big banks prestige
Will be worth enough to it under the
guaranty system; it should not begrudge !
The smaller banks the advantage which |
ne guaranty Of deposits will bring to 4
1 can not pass from this subject with
out referring to the fact that the big !
needs the guaranty as well as the
little one, for big banks fail as well as
small banks, and the bigger the bank the 4
sreater the calamity to the community
absolutely beyond danger, and a
needs protection against the
l,lg banks failure even more thar against !
he failure Of the small banks.
IL mas sometimes been objected that
ne guaranty system would bring into |
he banking business a lower class of
men and reduce the average in character. |
IN the contrary, the guaranty of de-
9osits, l submit, would, If it made any
ll1erence In this respect, bring into the
banking business a better class of men
!ge of character. 1t Is not to a mans
that he is not willing that one
his fellow men should lose money on
rs account. Is it not a mark of char
lcter that a man should be careful of
lis good name and considerable of the
'steem of his fellows? AT present a sue
'essful farmer or business man may be
Induced to take stock in a bank. 1t may
'e mat his name is desired to give
Itanding and credit to the bank, but
UGH a maj Is constantly haunted by the
ear that a bank official may be guilty
4 criminal conduct which will bring the
,ank into insolvency. It is even possible
nat the banks assets may be entirely
Who has become a stakeholder, may
be compelled to go beyond his
liability or meet the bitter criticism
4 the depositors who have suffered by
failure. Would it not be worth
omething to the stakeholder, in peace
+ mind, to know that the maximum Of
lis loss would be the value of his stock
md the 100 per cent liability, and that
10 depositor could lose anything? I am
onvinced that the guaranty of deposits
would not lead to degeneration in the
personnel of the bankers.
10 justify a law guaranteeing deposit
ors, It Is not necessary to show that the
-dvantage, to the bankers would amount
o more than the tax. The examination
I the banks would continue to be made
t the expense of the banks, ever If 1t
we're certain that the examination was
( no pecuniary advantage to the banks.
ne law would continue to require a GER
ain amount Of reserve to be kept on
and, even II 1t were certain that such
law brought no pecuniary gain to the
ank and 50 the banks ought to be
ompelled to insure their depositors
!gainst loss, even IL it could not be
that such insurance would bring
. compensating advantage to the bank.
he bank charter has a value If it were
ot valuable the bank would not be or
anized. The bank charter is q gift
rom the people through the law. and
he people who authorize the establish
nent of a bank have a right to demand,
n return, that the bank shall keep the