The Idaho Springs siftings-news. (Idaho Springs, Colo.) 1905-19??, 1908-10-03
deposition can lose 4

items before q deposition can lose q
cent.
For all the SITS national banks, ae-
cording to the accounts Of May II. 1904
this guaranty fund amounted to ST.
934.47O.5S2.
Al things now stand. the self-interest
of the bank is enlisted to do its business
honestly, and thus insure the deposit
or at a great risk to the BANK II 1t goes
wrong. What more can be done for the
depositor? To this the deposition may
say: I'VE don't wish to wait until the
bank pays OF its depositors." But, II il
wishes the privileges Of commercial
bank. It must share the delays OF liQui-
dation-
II depositors wish the privileges Of q
commercial bank. and yet do not wish
to wait until assets OF a failed bank
legitimate insurance. and obtain i'm
mediate redemption Of deposits
Anything can be insured IL the pre-
MUM is large enough to cover the risk
Since the guaranty of deposits, obtain
ed by making all the banks contribute
proportionally. is manifestly unfair
because IL holds bank responsible for
losses over which it had no control
then let the depositor 60 to q company
that insures such a risk. That Ii a vol
untary act, and perfectly fair.
The insurance Company will charge a
premium based on the character Of the
banks mana cement II q man ignor-
antly deposits in a speculative BANK
up goes the premium; and thus til
public will be driven by business rules
to deposit in banks which insurance
companies will accept at a lower pre-
MUM. In such a way badly managed
banks would be driven from business
1t may be said, however. that the
bank borrows from a depositor when it
receives deposits; and, as the bank ex-
acts collateral and security from Dor
rowers, SO the bank should give the
same security to the depositor as tho
borrower gives the bank.
II the combined banks, under a guar
anty law. are expected to guarantee all
depositors. then the parallel scheme
would propose that all borrowers
should guarantee the banks. That sort
of guaranty by borrowers would never
be accepted for moment by business
men. because good business men would
be held liable for the notes given to
banks by poor business men. and that Is
manifestly unjust. 1t would be equal
ly unjust that sound bal should guar
antee bad banks.
But the real answer to the demand
that the individual bank-not all banks
good and bad together-should give its
own depositor security by a guaranty
fund is that the bank does now furnish
a large fund in its capital. surplus etc,
and that provides a working arrange
ment between an individual bank and
the depositor to whom 1t is directly
responsible, without bringing in a
chimerical general scheme, which Is
also manifestly unjust "A
To put the funds Of the country inf9
the hands Of less careful men than now
certainly would increase wild banking.
promotions Of speculative enterprises
and intensity all financial crises 1t is
just the opposite of what should be en-
phasfzed in our banking In order to get
greater safety.
In truth, the safety Of the depositors
under any and all legislation primarily
depends upon what the bank does with
the deposits In Oklahoma under the
new law there will be good and bad
banking. Just as there will be without
guaranty system. 1t would be we'll
not to set the seal Of approval on the
Oklahoma law until the Oklahoma
hanks have successfully met a CONNER
cial crisis.
II the banks. which rely on the in
surance of deposits to secure business.
unduly expand. then no guaranty fund
of l per cent Of deposits will be more
than a leaf before a cyclone when the
real crisis comes. There is certain to
be some bad banking in Oklahoma. II
not why was the act passed? Solely
to make the good pay for the bad
Those who are unwilling or unable
to hold their own in the competitive
struggle wish to be helped out by the
State: SO that the wise and careful
shall pay for the foolish and rash.