The Emmett index. [volume] (Emmett, Idaho) 1893-1925, 1908-10-29
THE OTHER SIDE.

q W Bryan paramount issue
= in the presidential campaign is
bank guaranty deposit law. Liz
all other paramount issues,
there are two sides to it. and tn
defects in the Oklahoma law, anc
any such law, have been pointed
out by Thomas p. Kane, DEBUT,
comptroller of the currency. Mr.
Kane says the idea did not origi
nate with the depositors. nor will
the conservative, conscientious anC
reliable bankers, but with those
bankers who are too keen for nusi-
uess. He draws attention to the
fact that the first guarantee deposit
law originated i'll new state
where a high rate of interest is col
lected on loans, and where high
rate of interest is paid OIL deposits,
Here is his statement of Oklaho-
mas banking condition:
1.-THE legal rate of interest in
the state of Oklahoma is per cent.
| The contract rate is II per cent
Next to Texas, Oklahoma leads til e
states of the Union in the number
of national banks of the small cap
ital class that have been chartered
since the passage of the act of con-
gress of March Ia, 1900, providing
TOR banks with a minimum capital
Of $25, 600. There are in Oklaho-
ma at this writing S07 national
banks, 2l7 of which have capital
each of less than $4,000. Com
petition among this class of banks
is keen. A rare number of these
banks pay 6 per cent on deposit,
and receive II per cent per annum
on some loans. and from 2 to 5 per
cent per month OH Others.
With the other banks of the state
responsible for his desposits the in
judlcious banker can offer a high |
rate of interest to depositors, and
will then have to take doubtful
loans to get his money out. If he
fails. the reliable banks will foot
his bills. "The logical effect of
such a system as the Oklahoma
guaranty law" says Mr.. Kane.
lis to require the strong bank to
stand sponsor for the weak; the
conservative managedly for the
speculative institution. Personal
equation. an important factor.to be
considered in the banking business
is eliminated entirely, and so far as
the depositor is concerned, mex
perience, incompetency and reck
lessness count for as muchre5 con
servatism and Reputation The
relative strength and stability of
a bank would not concern the av-
erage depositor. He would reg I'd
his funds as safe in the wildcat
bank as in the sound and sanely
institution, because banks
Of the latter class under compulso-
l guaranty law would be response
BILE to the extent their unknown liza
oilty for any deficiency in assets
in excess of the deposit liabilities
IF the former concern. In addition
hereto, the self-reliant banks would
'ufle, the loss of business diverted
o the speculative or incompetently |
institution, which it
would not have obtained but for
he confidence inspired by the Sc
.urity of the guaranty.
at is not the function of the
state or national, to +
guaranty deposits in the banks any v
more than it is to insure the bust. -
less ventures of the individual, :,
ompany, or corporation in any 4
ther investment or risk. Neither u
S it the legitimate function of hanks 4
D insure or guaranty the de- II
osits of each other. d
1t is claimed by some of the ad /.
coates of this policy that because A
lie state and national governments n
xact of banks security for public G.
lnds, that the depositor should be 6
kewise secured. An individual 20
as the same right as the govern h,
ent to require security for his de- ae
osits, but neither the government h,
or the deposition has any right to fo
'quire one blnk to guaranty a de-
)sit in other banks. A bank may "a
wtully and legitimately guaran- ri
e its own obligations, but it has e.,
} moral right from an economic n,
,int of view to guarantee the OBJ in
cations of another party. bank or w
dividual. Such a policy based, as cl
would be. upon a false promise, de
ust eventually fail because of its of
hereut weakness. =,