The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1908-08-04
ADJUSTMENTS TODAY.
THE M ETALS
THE pEposlToRs' GUARANTEE.


Attorney General Bonaparte has rem
dered an opinion that national banks
in Oklahoma may not legally contrib
ute their proportion of the state fund
for the guarantee of deposits. In his
judgment the assessment for such
purpose is distinctly without the
province of a national bank under it's
charter, in which view he differs from
those lawyers who held that the guar
antee fund was simply a form of in
surance which any bank. national or
private, could properly assume.
However the attorney generals
opinion will constitute the law unless
some interested bank tests the ques-
ton in court, and meanwhile the ma
tional banks of the new state will be
at a disadvantage in competition with
the state banks who are included in
the guarantee arrangement. Mr..
Bryan, in his brief comment on the
opinion, says the incident will call at
tention TO the need of legislation for
the protection of depositors: certainly
il will serve to emphasize the import
ance of the subject.
Some bankers have been rabid in
their denunciation of the guarantee pro-
posal. characterizing it as an invita-
ton 10 dishonesty. putting a premium
on incompetent management and
otherwise demoralizing in its tenden-
cies. That seems an extraordinary po-
hundreds of clearing house associa-
tons formed themselves into organza-
tions for the mutual guarantee of de-
positors and stockholders. The neces-
sity for these organizations arose with
the weaker banking institutions. Be-
ginning in New York and extending
clear TO the Pacific coast, the plan was
originated and put into operation on
incredibly short notice; millions of as
set currency We're issued and enor-
NOUS obligations underwritten with
out the loss of a dollar TO any of the
banks associated.
Nothing was said then by bankers
about the danger of such a practice,
or of Gus being a premium on incom-
petent management; yet, in effect, the
purpose and result OF the scheme was
10 prevent widespread disaster by
protecting from failure those banks
whose operations had been ill-advised
or reckless. IT other words, the strong
banks saved the country from the
worst effects of a panic by combining
to uphold the banking credit OF the
country and reassure depositors by a
show of organized solvency.
" an impromptu plan evolved In a
panic could work 50 successfully, why
shouldn't an insurance plan. scien-
tifically developed and worked out I'M
der the supervision of the comptroller
OF the currency. be even more practic-
able? II would. of course. involve
very close supervision of the banks
protected by the fund. but the clear
ing house committees of last winter
supervised their operations infinitely.
Inspected all the securities on which
their certificates we're issued and
showed very conclusively that close
supervision is not only possible, but
most desira bic.
II is worth noting that so far the
objections to a depositors' guarantee
fund comes. not from depositors, but
from bankers; and that the reasons
for opposition advanced by these few
bankers prove little but the authors
inability TO see clearly the public in
tsrest in some form of operation that
shall protect the depositors upon
whose funds the whole banking bust
ness is built up. Anything that will
serve 10 increase public confidence in
a bank Is 10 the interest OF that bank:
and a plan that promises to prevent
the demoralizing effect of bank fail
ures upon depositors ought to be well
coined by the bankers. who are first
20 feel the evil effects of loss of pub
lie confidence.