Kingsbury County independent. (DeSmet, Kingsbury County, S.D.) 1894-1929, 1908-10-30
A SORRY SHOWING.
Practical Workings of Oklahoma
Bank Deposit Guarantee Law
Explained.
Reckless Banking and Speculative
Methods Follow Passage of
Law.

The practical workings OF the Okla
homa law guaranteeing bank deposits
were described by Mr.. j. w. McNeal,
one OF the most substantial bankers Of
that state, and president Of the Ma
tional Bank OF Commerce. Guthrie, in
a short public address at Denver, Oct.
|, 1908.
Mr.. McNeal said
10 my mind ii is the most vicious
and pernicious law eve forced on a
body OF honorable men. 1t contains n
provision for an unlimited mutual liza
bility for all the d~efalcations, lack OF
judgment, dishonest and incompetent
bankers, without any recognition of
The time-tried. strong banker, who may
have spent a lifetime in building up his
reputation. Under the provisions OF
This law, the State Banking Board is
required TO levy an assessment equal to
one per cent. Of the average deposits
In each bank, and, in the future, to levy
as often as may be required. a sum
sufficient to maintain this fund, at one
! per cent of the average deposits of the
state.
wild Cat Banks.
What has been some of the results
Of the actual operation Of this law u
Oklahoma? There have been seventy
Epven new state bank charters issued
! rinrn Tho o1Antinn nf This NV fnriu-
two OF these with a capital stock Of
only $4,000 each. There has been a
regular hegira for starting new state
banks without regard TO the necessities
Of the community or the character Of
The men starting the banks.
I'VE have one instance Of where a
man failed in Kansas, under his own
name, then started up In business
! under his wife's name and failed, beat
ing his creditors out OF $4,000, not
paying them a cent. Under the old ter
ritoriaf law, he attempted, under the
guise of relatives to start a bank. but
N two years his business was so trifiing
hat it forced him out of the business,
He now has already started three
banks In Oklahoma and boasts that he
will start twelve more. Within sixty
days from starting n Of his banks, /
am informed, and his statement shows,
that he had a deposit account of over
b109, 900. His cashier is under indict-
ment for embeZzIement. | hope and
trust that he will be able to explain
the matter without wrong to him.
only mention these facts to show that
Ii is immaterial what character Of men
are at the head Of banks, they get the
business by claiming that the state is
guaranteeing them and it makes no
difference whatever as to the character
or personality Of the officers. A man
may bet all his money on the races,
may gamble on the Board of Trade
may fight joint whisky, may lead a
iicentious life, and go out and solicit
deposits, saying What do you care
what kind of a life | lead, the state is
behind me?'
Banks without Capital.
Two men recently started a bank Of
$25, 1000 capital, in Oklahoma City,
town of forty or fifty thousand inhab'
itants. When asked how they expected
TO succeed with a bank Of $4,000 cap
ital in a city of that size, n Of then
replied What do we care about cap
ital, the state is in partnership witt
us?" The president of the First Ma
tionai Bank Of Perry was also a mer
chant and failed in business and was
compelled to go through bankruptcy
Naturally he had to resign his connec
ton with the First National Bank. HI
new has taken out a charter and II
president Of a state bank in Oklahoma
One man, when prohibition closed hi.
saloon, quit the saloon business ant
started up a bank and has thirty OF
forty thousand on deposit.
There can be but one deduction
from this enormous rush for s~tartin:
new state banks. They are being start
ed by irresponsible, inexperienced
men. and, instead Of indicating a solit
growth for the state of Oklahoma, the.
indicate an era of irresponsible an,
wildcat work.
"One OF the dangerous evils OF thi
Guaranty Law is that it guarantee
credit deposits as well as cash depos
it's. Now, you all know that not NOR
than one-tenth of a banks daily depos
its are in actual cash. Nine-tenths ar
credit deposits, are either checks an
drafts or proceeds of loans. Whel
these credit deposits, that are made a
the proceeds Of a loan, are guaranteed
the guaranty certainly reaches 10 til
guaranteeing of the loan itself, for tn
reason that the deposit is merely tn
result OF the loan.
Fictitious Deposits.
81 have heard 1t discussed, and
think it feasible for a dishonest ma