Omaha daily bee., 1908-11-02
HOW IT WORKS IN OKLAHOMA
Guaranty not Unmixed Blessing in
Southern State.
PLETHORA OF SMALL BANKS
state omcers Find Tendency 60 wild
Cat Methods and Apply Curb
with Great Regu-
iarity.

GUTHIR OH. Nov. l-Cspecial.)-Ac-
cording to o. z. Grecian. president Of the
First National bank OF McCloud. okl.. the
political economists who have discussed the
bank guaranty plan from a theoretical
standpoint. have made inadequate forecasts
Of the bad features which the scheme has
actually developed in the course OF It's short
trial In this state.
'our so-caHed state guaranty law" de-
clares Mr.. Grecian, lis, in my opinion the
most vicious ever enacted by a state legts-
iature. one of the worst effects conspicu-
ousiy apparent IL the fact that new state
banks are being chartered at an alarming
rate. and we all know that there are al
ready entirely too many banks In the
state.
More than fifty new hanks have been
started In Oklahoma since January l, 1903
and many Of them, to my personal knowl-
edge. will be managed by Inexperienced, In
competent, would-be bankers. who imagine
that under the guaranty law banking VIII
be simply a snap
There Is no denying that, IN the eyes OF
the average depositor. right at the present
moment, TIE guaranty scheme looks good;
It is popular with depositors. for the de-
poaltor feels he Is relieved OF all RESPONSE
DIZZY IN BeleCllnB MS bAnhNts "hO - $50
inevitable result? That the wouid-be banker
has the ADVANTAGE over the substantial, the
conservative banker. who has spent the best
years of his life building up a solid institu-
ton.
cor course. the Oklahoma democrat will
Immediately reply that all this Is the mere
statement OF individual opinion and that
facts are what count. Very we'll; let us go
in for a few facts:
"The little village Of Harrah, five miles
from here, with a population Of something
like 100 people-all 1t is likely to have Tor
some years to come-now has two banks
with total local deposits OF less than $1,000
one Of these banks was recently organized
under the guaranty law and may legiti-
mately be regarded as a child of that en-
actment.
Any Bank Good Enough.
Fright here I might state that last fall
the older OF the two banks was marc
pushed and that / came to It's rescue and
at least helped TO keep It going. But no"
they are guaranteed and in the eyes Of
many depositors they are perhaps stronger
than my bank. The fact is they have beer
paving 6 per cent on time deposits-and
paying that as a normal rate to some OF
our own customers. =,
IT cite this instance OF the situation II
the little town Of Harrah' with its 100 IN
habitahts and its two banks, not because
Of any personai feelings I have in the
matter. but simply because 1t shows deli
n,tely and conclusively the extent to which
the Oklahoma guaranty law is hatchinS
more hanks than the state has any earthly
need Of or use for. and also because it putt
clearly before the eyes of every fair maj
the fact that the law is actually stimulat
Ing the payment of absurd and impossible
rates OF interest in order to attract de
posits.
'If you think that any bank can afforC
to pay 6 per cent interest on time de
posits without taking rash and indefene!bl
chances with the money of the deposttors
then refer the proposition TO any banke
or set Of bankers anywhere in Americ'
outside OF Oklahoma. You will get but on
answer. and that is that the proposition
Is absurd and impossible.
mot far from here Is another town o
about 1000 inhabitants, which has fou
banks-two OF which have been organizes
since the enactment of the guaranty law
That a town of only 1000 inhabitants ca
maintain more than two healthy banks 1
an absurdity on the face of 1t, but thi
Absurdity lie emphasized by the fact tina
The total deposits of the four banks alto
gether are less than 100000. 1t is not to
much to say that this kind OF thing
going on all over the state, and that plainl
by reason Of this guaranty law, Oklahom
IS being overbanked at an alarming rate.
In this connection the fact should not b
overlooked that there are pointed evidence
bf alarm on this score in the minds OF tn
men who composed the state ADMINISTERS
lion, or at least those members Of tn
administration having directly to do wit
the application Of the state guaranty law
and its provisions.
Time to Apply Brakes.
Take, for example, the significant actio
Of the banking hoard and the bank CON
missioner IN refusing to Issue a charts
TO an applicant for a bank to be organize
In q town OF insignificant size and alread
supplied with at least three banks. Tt
determined stand taken by the state off
rlals in. this case indicates with strikin
rlearness that they were thoroughly scare