The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1908-09-02
ARE NOT ALIKE.
Senator Fred Quincy Explains
Bank Guaranty Plank.
Not Like a Private Insurance
Scheme.
STATE TO SUPERVISE.
Would Be Under Direction of
Bank Commissioner.
Thinks Compulsory Law Would
Not Be Legal.
STATE TO SUPERVISE.


author of the deposit guaranty plank
in the Republican platform has pre-
pared for the State Journal a state
ment in which he sets forth the differ
ence between the deposit insurance"
scheme. and the deposit guaranty
proposition.
Senator Quincy explains that the de-
posit guaranty plank of the Repub-
lican platform requires the state bank
commissioners department to super
wise and control the funds contributed
by the banks for mutual protection,
while a deposit insurance company
| is merely a private Institution like any
insurance company, run for private
gain.
The statement follows:
1.-The attempt that is being made in
some quarters to interpret the bank
guarantee plank in the Republican
state platform to mean a voluntary
agreement among individual bankers
to furnish mutual guaranty such as
they see fit to their depositors, is
wholly erroneous.
THE Republican plank pledges the
Legislature to pass an enabling act
that will permit the state banks of
Kansas to enter into a voluntary and
binding obligation to the banking de-
partment, to contribute to fund to
mutually guarantee the depositors of
| the participating banks against loss
through the failure of any of such
banks so participating, the whole mat
ter to be under the supervision of the
state bank commissioner department
the state bank commissioner being the
| only state officer having full power and
authority to administer and enforce
the state banking laws. The act to be
| effective would necessarily be broad
enough to take in every state bank,
and by permission of the federal gov
eminent or otherwise, every national
bank in the state that was solvent and
conducting it's business strictly within
| the laws under which it was incorpor-
ated. The platform also declares for
| federal law enabling the national banks
| of Kansas to participate in the state
guarantee fund.
Some will ask: why not make the
| law compulsory upon the BANKER To
| those l would answer, because it is ex-
/ tremely doubtful whether such an act
| would be constitutional either in this
| state or the United States, as applied
| to banks already doing business under
| a charter from the respective govern
| ments. No one would contend that an
| act of the legislature or congress COM
polling banks to insure their buildings,
| their employees, or their funds against
| fire, defalcation or burglary would be
| constitutional. On the other hand,
authorized by an act of the legislature
| to contribute to fund for the protec-
| ton of despositors by the voluntary
| act of its depositors and stockholders,
| such enabling act being equitable as
| between the banks, it would in fact be
compulsory on the banks which desire
| the confidence and business of their
! customers to avail themselves of the
| privilege. In so doing we would not
| have the whole matter l1angin" on the
| decision of court after it had bNen
| put in operation. as is the case in
| Oklahoma now, their law beng COM
pulsory and the question of the con-
| stitutionality of the same is before the
| courts, and if Oklahoma's act should
| be upheld by their courts it does not
with compulsory act in Kansas or
| the United States. as even constitu-
| tons and courts differ.
THE whole question of guaranteed
deposits is one that has been raised a d.
vanced and advocated more by bank
ers than by depositors and any at
tempt to separate the interests of the
| banker and the depositor is cheap
effort of the political demagogue
| While the benefits to be derived are
more directly in the interests of the
depositors, the banker who favors ana
| advocates the plan believes that equal
| benefits will accrue to him. The only
| interest the depositor has in the mat
ter is to know that his deposit is
| placed beyond the possibility of loss
and beyond this he can afford to leave
| the details to the legislature and the
bankers who pay the freight
THE principal argument of those OBJ
| posed to the plan is that it would have
a tendency to encourage reckless bank
| ing, by offering inducements to deposit
! tors, and for men of doubtful charac-
J ter to enter the banking field To my
mind it would work in the opposite di-
| rection by limiting the rates of inter
| est that could be paid by the guaran-
| teed banks, and by strict enforcement
| of the banking laws it would drive the
1 reckless banker Cf such there be in
Kansas. out of the business. and this
| contention is clearly shown by the first
| case of failure under the Oklahoma
| law. The bank of Colgate was closed
| and it's business liquidated not because
1 it was insolvent but because its officers
1 were violating the banking law of the
| state by loaning TO its officers con-
| trary to law. No one suffered loss in
| the transaction except the stockholders
| and the officers of the bank and with
| out the guarantee law and the inf1u-
/ ence of the conservative bankers par
| ticipating therein, to stimulate the
| bank commissioner to act the reck-
| lessness of the Colgate bank officers
would undoubtedly have continued I'M
| til there would have been a serious fail
| ure, and loss to the depositors and ev-
| cry business man in that community
/ Il believe a similar law in Kansas
would compel every banker to rightly
| live up to the banking laws, in which
case there would be few, If any, fail
| ures. or if he persisted in violating the
| banking laws, require him to liquidate
| and retire from the business at no loss
| to the business interests of the COM
| rnunity If 1 did not feel sure this
| would be the result l would not favor
| the measure.