Omaha daily bee., 1908-10-28

(COntlnueu from flTSI rage
thankful they did not commit themselves to
that heresy, and 1 firmly believe that five
years hence they will be Just as thankful
to the men who now oppose the guaranty
Of deposits and who are trying to educate
them as they were for the firmness shown
by a few in 1896"
Missouri Banks Gain.
John e. swanger. secretary of state for
Missouri, says: "If any deposits have gone
to Oklahoma on account of their guaranty
law, which went into effect about Febru-
airy IS, / have heard no complaints from
our southwest Missouri banks"
According to figures furnished by Mr..
swanser the deposits in the banks of Jas
per. Mcdonald and Newton counties, Mis-
souri,, February IA, 1908, the day before the
Oklahoma guaranty law went into effect,
were 50, 4s5. 7Ss, and May II, 1905. they stood
at the increased figure Of 3,60s, sos.
OF course this whole discussion as to
whether the state banks have gained in de-
posits and the national banks lost uD to
this date is wholly superficial and without
Importance az Indicating the real merits of
the law. The true tests will be found when
it's influence upon the banking buisenss is
fully developed.
1t unquestionably eliminates the value of
experience and of established character as
factors in attracting deposits. Heretofore,
in order to establish a successful banking
business, It has been necessary to identify
some of the leading and highly regarded
men OF the community with the institution
as officers and directors.
Doors Opened to Wildcats.
Every bank advertises freely it's list OF
directors because the names carry weight
and attract business. In Oklahoma these
considerations no longer have any weight
any three men who can furnish the min
imum capital required, which is $4,000, can
start a bank and stand just as fair a
chance OF getting deposits as the oldest an6
best known banking institution in the state
differed by men of well known character
and responsibility.
In fact, the conservative banker is hope.
lessly handicapped in competition for de.
poslts, because with his views Of the man.
ner in which deposits should be invested
he cannot bring himself to offer induce
ments equal to those Of his more venture
some competitors. 1t would seem that IL
the long run he must lose his deposits t.
his more aggressive rivals and yet remain
responsible for them in their hands.
AAAt AAlNiANs " JIG ~" posN oA NAfAA 81
culations upon the assumption that tn,
banking business will be carried on in tn
future practically as in the ~past-by th'
same bankers with the same conservatism
and with no greater losses. The opponentJ
Of the law predict a rapid multiplication o
banks. with competition intensified and
lowering of the standards OF banking prac
tice, a general Generalization of the bust
ness, and heavier l~osses-and the symptom
already developed point to a verlfication o
these predictions.
More than fifty new banks have been or
ganized under the state law since Januar
l in addition TO those which have change
over from the national system. Most @
these new banks have only the minimum
capital required by law, and In nearly a
cases the banks changing from the nations
system have reduced their capital in tab
Ing out state charters. evidently upon IN
theory that the public is no longer inter
ested In a banks capital, but relies upo
the guaranty fund. l have found only on
bank which has changed from the nations
to the state system which has not reduce
its capital.
Any business man or banker knows tina
the capital and surplus OF a bank is IN
real guaranty fund behind deposits and I
which depositors must look for their secul
ity. This tendency to reduce capital an
rely on the guaranty fund TO satisfy de
positors is what might be expected and
clear proof-beyond all contravention-
that the operation OF the law is to rela
and reduce the real and substantial safe
guards to the business.
Law COmDeIs Issuance Of Charter,
This tendency TO multiply the banks ha
gone so far that the state bank commits
sioner has undertaken in some instances I
hold il in check by refusing charters TIL
organizers Of a new Institution at PraK,i.
Okl., having been refused a charte,
brought mandamus proceedings aRains
the commissioner. TO which he resnonda
in court by stating that Prague was a TOW,
Of less than 1000 inhabitants ana aIresd
had three banking institutions ub,o
amply supplied it's necessities. tia, m
organizers OF the new bank were noonI
without previous banking experience a.
that he had exercised a proper discrst,a
IN refusing the charter.
The district court. however, SUSTAINED 81,