The Leon reporter. (Leon, Iowa) 1887-1930, 1908-10-01
1T WILL RESTORE GOOD TIMES.
That Is What Senator Owen of
Oklahoma Says of the Gudrdn-
tee of Bank Deposits.


year. Before departing for Oklahoma
to take part in the campaign he made
some interesting suggestions relative to
the operation and effect of the Bank
Guarantee law of Oklahoma. 1t will be
remembered that he vigorously pre-
sented in the United States senate the
proposition to guarantee the deposits
of the national banks of the United
States. He favors guarantee fund to
be composed of the present tax on ma
tional bank circulation which he says
is far more than sufficient.
Senator Owen has been in the bank
ing business for eighteen years and his
opinion is from the bankers viewpoint.
He said: "The Oklahoma banking law
does not provide for state guarantee.
1t does not impose an unlimited liability
on the banks. 1t only provides a bank
er's guarantee fund equal to the sum Of
one per cent of the average annual de-
posits of the state banks. From this
fund is paid instantly the depositors of
any insolvent state bank. There has
been only one bank failure since the
state was established
In this case the officers of the state
bank We're borrowing its funds without
security. The closing of the bank saved
the stockholders great loss which
they would otherwise have suffered.
The depositors were instantly paid and
it cost the guaranty fund nothing what
ever, the losses of the bank falling upon
the banks own funds; moreover, the
business people of the town were not
disturbed"
Gwen the guaranty fund is redepos-
iGed with the contributing banks in
Oklahoma, where they deposit with the
state statutory collaterals."
"The guarantee fund plan in bene-
fetal to the state banks as follows:
First. 1t has increased their deposits
several million dollars, considerable
part of which is money previously
boarded by people afraid of any bank.
Second. The depositor being guar
anteed, the banker has no fear of run.
He therefore need not carry an unusual
large cash reserve. He may thus make
large loans, accommodate more borrow
ers and increase his earning power.
Third. The guaranty plan gives the
banker greater peace of mind, prevents
his pressing weak creditor unduly,
encourages him to extend accommoda-
ton required by commerce, for he has
no fear Of his frightened depositors
calling him to sudden settlement.
Fourth. There being no danger Of
financial panic under this system the
banker would never fear the reserve
cities refusing to deliver his reserve on
demand.
Fifth. Panics being thus avoided, the
stability of our national commerce
would not be disturbed and the banker
would be benefited both by stable line
of deposits and a stable line of demand
for credit, of which the banker is the
purveyor.
Sixth. The bank deposits would be
increased under this system from thirty
to forty per cent. Every dollar in cur
rency in the national banking system
means ten dollars of deposits and ten
dollars of bills receivable, as appears
from the reports Of the comptroller of
the currency for the last thirty years.
The money in hiding or in boarding,
outside of pocket change. is estimated
at between thirty and forty per cent of
the currency actually in bank, and if
this money were brought out of hoard
ing, as it would be by the guaranty
Plan, and digested by the banks, it
would mean an increase of deposits of
about thirty per cent, and an increase
of bank credits extended to commerce
of as much more. This would mean re-
newed prosperity and what is of more
Importance it would mean stability.
The theory that corrupt banker
could profit by the guaranty fund has
no foundation. In Oklahoma only man
of good precedents. of good reputation
and of good association is permitted to
have state charter. He is not per-
mitted to borrow from his own bank
nor make excessive loans. Before the
guaranty fund could be injured by his
failure every dollar of his own money
of his directors money, and their double
liability must have been exhausted.
A big banker from Chicago has op-
posed the guarantee plan on the the
DRY that this plan would make the de-
positor in small bank as safe as in a
big bank, and would be more advan-
tageous to the small bank than to the
big bank. The present line of deposits
in big and little banks alike is composed
, of depositors each Of whom individually
feels entirely safe now. And the guar.
anty plan would not change the depos.
itors. 1t would, however, prevent their
making run in the future. But the
guaranty plan would benefit big and
little banks alike by bringing out the
boarded funds, especially the small
, banks. The big bank would benefit also
because their additional funds would
be redeposited by the small banks ir
the larger banks according to theil
usual custom.
The ordinary depositor is influenced
, by his environment, by his acquaintance
with the officers of bank, with its
> directors, with it's depositors, or some
such personal reasons. The larger the
bank the greater these attractions, anC
r the more the bank will benefit.
: The bankers, of all The people in the
world should cordially favor the guar
1 antee plan.
. The advantage to the ordinary either
l whose cash is deposited is too obvious
!. to need argument. There are fifteen mil
s lion depositors in the United States ant
: this safeguard and guarantee is of tn,
' greatest Importance to the business lift
8 of the humble citizen. Why should no
) the citizen depositor be safe? 1t cost.
) the bank nothing. Why should he be