The citizen-Republican. (Scotland, Bon Homme County, S.D.) 1???-19??, 1908-10-22
A SORRY SHOWING.
Practical Workings of Oklahoma
Bank Deposit Guarantee Law
Explained.
RccElesa Banking and Speculative
Iethoda Follow Passage Of
Law.

The practical workings of the Okla
sloma law guaranteeing bank deposits
were described by MIR. ]. w. McNeal,
. n of the most substantial bankers of
that state, and president of the Ma
9ional Bank of Commerce, Guthrie, in
a short public address at Denver, Oct.
L, 1868.
Mr.. McNeal said:
10 my mind it is the most vicious
and pernic!ous law ever forced on Il
body of honorable men. 1t contains u
provision for an unlimited mutual lia-
'bility for all the ~defalcations, lack of
Judgment. dishonest and incompetent
bankers, without any recognition of
the tilne-tried, strong banker, who may
nave 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 III
Oklahoma? There have been seventy
seven new state bank charters issued
since the adoption of this law, forty
two of these with a capital stock Of
op1r G1H HGn 90 oh l1Nhora has hoan n
regular hegira for starting new state
banks without regard to the necessities
of the community or the character Of
the men starting the banks.
"We have one instance of where a
man failed in Kansas, under his own
name, then started up in business
dnder his wife's name and failed, beat
ing his creditors out of $4,000, not
paying them a cent. Under the old ter
citorial law, he attempted, under the
guise of relatives to start a bank. but
IN two years his business was so trifiing
that 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 one Of his banks, 1
am informed, and his statement shows,
that he had d deposit account of over
S109 1000. His cashier is under indict-
Enent for embeZziement. I hope and
trust that he will be able to explain
the matter without wrong to him. 1
only mention these facts to show that
1t is immaterial what character Of men
are at the head of banks, they get the
busine"s 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
sicentious life. and go out and solicit
deposits, saying What do you care
what kind of a life 1 lead, the state is
behind me?'
Banks Without Capital.
Two men recently started a bank of
$685. 600 capital, in Oklahoma City, a
town of forty or fifty thousand inhab-
3tants. When asked how they expected
to succeed with a bank of S25, 900 cap
dtal in a city Of that size, one of them
replied What do we care about cap
dtal, the state is in partnership with
5ls?' 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-
1tion with the First National Bank. He
new has taken out a charter anu is
president of a state bank in Oklahoma.
One man, when prohibition closed his
saloon, quit the saloon business and
started up a bank and has thirty or
forty thousand on deposit.
There can be but one deduction
from this enormous rush for starting
new state banks. They are being start
ed by irresponsible, inexperienced
men, and, instead of indicating a solid
growth for the state of Oklahoma, they
indicate an era of irresponsible and
wildcat work.
One of the dangerous evils of this
Guaranty Law is hat it guarantees
credit deposits as well as cash depos-
ats. Now. you all know that not more
than one-tenth of a banks daily depos.
ats are in actual cash. Nine-tenths are
credit deposits, are either checks and
drafts or proceeds of loans. When
these credit deposits, that are made as
the proceeds Of d loan, are guaranteed
the guaranty certainly reaches to the
guaranteeing of the loan itself, for the
reason that the deposit is merely the
result of the loan.
Fictitious Deposits.
81 have heard it discussed, and !
think it feasible for a dishonest mar