The Holly chieftain., 1908-10-02
before . Sepositor can lose ,

items before deposition can loss +.
cent
For all ths e.T:S national banks ,o.
ccrding to the accounts Of May II, 1905
tais guaranty fund amounted to 81
8a4.47O,5S2.
A. things now stand, the self-interes,
Of the bank 10 enlisted to do Its busines,
honestly. and thus insure the deposit.
or at Q great risk to the bank IL 1t xo4,
wrong. What more can b. done for tbs
depositor1 To this the deposition nav
say: I'VE don't wish to wait until thu
bank pays OF its depositors" But, II +,
wishes tho privileges OF q commercial
bank, It must share the delays of liouI.
dation.
II depositors wish the privileges Of 8
commercial bank, and yet do not wish
to walt until assets Of 4 failed bank
are liquidated. then they can resort 10
legitimate insurance. and obtain I'm.
mediate redemption of deposits.
Anything can be insured II the pre.
MUM 10 large enough to cover the risk
Since the guaranty Of deposits, obtain.
ed by making all the banks contribute
proportionally. IL manifestly unfair
because 1t holds bank responsible for
losses over which 1t had no control
then let the depositor 60 to a company
that insures such risk. That ia a vol
untary act, and perfectly fair.
The insurance Company will charge a
premium based on the character of the
banks management. II a man ignor.
antly deposits in q 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 q 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, 80 the bank should give tho
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 to
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
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.
To put the funds Of the country into
the hands Of less careful men than now
certainly would Increase wild banking,
Of speculative enterprises
and intensity all financial crises. 1t is
Just the opposite of what should be en-
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
Just as there will be without
a guaranty system. 1t would be well
not to set the seal Of approval on the
Oklahoma law until the Oklahoma
banks have successfully met a CONNER
cial crisis.
II the banks, which rely on the in
of deposits to secure business,
unduly expand, then no guaranty fund
Of l 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. If
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; 30 that the wise and careful
shall pay for the foolish and rash.