La Junta tribune., 1908-10-03
items b.for. . dspositor can loss .

Items before . dspositor can ioss .
cent.
For all the e.77s national banks. ae-
cording to the accounts Of May IL 1905,
this guaranty fund amounted to g..
34,47O,5s2
Al things now stand. the self-interest
Of the bank is enlisted to do it, business
honestly, and thus insure the deposit.
or at 4 great risk to the bank II II goes
wrong. What more can be done for the
depositor? To this the deposition may
say: 1--WE don't wish to wait until the
bank pays on its depositors." But, II IL
wishes the privileges of a commercial
bank, II must share the delays Of liqui-
dalton.
II deposisprs wish the privileges Of .
commercial bank. and yet do not wish
to wait until assets Of failed bank
are liquidnted. then they can resort to
legitimate insurance. and obtain I'm
mediate redemption Of deposits
Anything can be insured II the pre-
MUM is large enough to cover the risk.
Since the guaranty Of deposits, obtain
ed by making all the banks contribute
proportionnlly. Is manifestly unfair
because II holds a bank responsible for
losses over which It had no control
then let the deposition 60 to company
that insures such risk. That is a vol
untary act. and perfectly fair.
The insurance company will charge
premium based on the character OF the
banks management. II man ignor-
anty deposits In speculative bank,
up goes the premium: and thus the
public will be driven by business rules
to deposit in banks which insurance
companies Will accept at lower pre-
MUM. In such way badly managed
banks would be driven from business
1t may be said. however. that the
bank borrows from depositor when 1t
receives deposits; and. AS the bank ex-
acts collateral and security from bor-
rowers, so the bank should give the
same security to the depositor as the
borrower gives the bank.
II the combined banks, under 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 a moment by business
men. because good business men would
be held liable for the notes given 10
banks by poor business men, and that is
manifestly unjust. 1t would be equal
ly unjust that sound banks 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 guaranty
fund Is that the bank does now furnish
large fund in its capital. surplus, etc,
and that provides 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
To put the funds of the country into
the hands Of less careful men than now
certainly would increase wild banking.
promotions Of speculative enterprises
and intensity all financial crises. It is
Ih~A eAsE OkStoSiAC u WluN ouOuiu UG elu-
phasized 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
a guaranty system. 1t would be well
not to set the seal Of approval on tho
Oklahoma law until the Oklahoma
banks have successfully met CONNER
cial crisis.
II the banks, which rely on the In
surance of deposits to secure business,
unduly expand. then no guaranty fund
of I per cent Of deposits will be more
than leaf before 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.