Omaha daily bee., 1908-10-28

had exceeded his authority. thus breaking
down the only barrier possible to the UNI
restricted multiplication Of banks.
Startling instances are being related
where men who are without either the
moral or business qualifications commonly
and rightly considered to be necessary for
the management OF banking institutions
are securing bank charters and on the
strength OF the guaranty act are making
successful Roadway In acquiring deposits.
]. W. McNeal, president Of the National
Bank OF Commerce at Guthrie. has openly
and publicly made the following statement
concerning certain cases OF this character:
1--WE nave one instance of where a man
failed in Kansas under his own name, then
started up in business under his wife's
name and failed. beating his creditors out
OF $4,000. not paying them a cent. Under
the old territorial law he attempted, under
the guise Of relatives, to start a bank, but
I'm two years his business was so trifling
that It forced him out Of the business.
He now has already started three banks
in Oklahoma and boasts he will start
twelve more. within sixty days Of start
ing one OF his banks, his statement shows,
he had a deposit account Of over $1OO, 900.
His cashier is under indictment for en-
bezzlement. I hope and trust that he will
be able to explain the matter.
81 only mention these facts to show that
1t is immaterial what character Of men
are at the head of banks-they get the
business by claiming that the state is
guaranteeing them and It makes no differ
ence whatever as to the character or per-
sonality Of the officers.
Claims state as Partner.
"Two men recently started a bank OF
SIS, 900 capital in Oklahoma City, a town of
10000 or $4,000 inhabitants. When asked
how they expected to succeed with a bank
Of $4,000 capital in a city of that size one
Of them replied: What do we care about
capital? The state is in partnership with
us
THE Farmers bank OF Glenco. Okl., has
the following astounding claim printed on
the lower left hand corner of its checks
Don't forget that all depositors in this
bank are guaranteed against loss by the
state of Oklahoma This claim is by no
means an exception; 1t Is systematically
worked by the banks operating under the
guaranty law to obtain deposits.
THE president of the First National bank
of Perry was a merchant and failed in
business and was compelled to go through
bankruptcy. Naturally he had to resign
AS ~ NiS lSN NdllOldl
bank. He has now taken out a charter
and is president Of a state bank in Okla.
homa. Another man -- when prohibition
closed up his saloon-started up a bank
and has $4,000 to $40, 600 on deposit.
There can be but one deduction from
this enormous rush for starting new state
banks. They are being started, to a great
extent, by irresponsible, inexperienced mer
and instead of indicating solid growth fol-
the state Of Oklahoma they indicate an era
of irresponsible and wildcat work
II have heard 1t discussed-and think II
might be worked out in actual practice
here-that a dishonest man or set of mer
might organize a 1000 bank, then create
a lot Of fictitious deposits as the proceed,
Of dummy notes and then let the banl
close its doors and call on the guaranty
fund to pay these deposits. Naturally Il
such a scheme were worked out the de
posts would be credited to men in no way
identified with the note itself.
we had one bank failure in my towI
for something like $1,OOo,O00 This woulC
have taken more than 8 per cent assess
ment on the deposits of the state banks o
Oklahoma. Suppose a bank had $780, O.
deposit on a capital stock of $40, 10000 pc,
cent. or one-half of its capital stock, would
| Dt COnllSCdltu " Ildhe up TIE One loss
It is more dangerous to the honest small
banker than to the large one. beeaus'
the large one can prepare himself t.
weather the storm.
RascaIs Make More by Failing.
Under the guise of this law an attemp
is being made to put all banks on an exac
equality. The man who has spent a life
time in building up an honorable reputation
is sacrificed for the sake of making som
incompetent, dishonest banker exactl!
equal to him. 1t is a mistake to suppos
that sacrificing the assets of the solven
bank is going to prevent the rascal iron
failing. There is more money in it for tn,
rascally banker to fail under this law thai
to continue in business"
These are certainly strong and ~startlinI
statements, but as Mr.. McNeal has no
hesitated to make them before a gathering
of several hundred people the presumption
is he has the facts with which to bacI
them up.
One Of Mr.. Bryan's ~favorlte arguments 70
the guaranty law is that inasmuch as tn
national, state and municipal government
are in the habit of requiring depositor
banks to furnish security for those publ
deposits the private depositor is wal
ranted in also demanding security.
II Is lIltIGslllEs III view vi liS i uiiiCh
to find that the state of Oklahoma-an
likewise the county and municipal author
ties through the state-are still requirin
depository banks in the state to furnis
special security for all deposits, In othe
words, they are not yet willing to trus
the guaranty law In substitution for Specis
security.
Another curious and ludicrous feature c
the situation is the fact that the guarant
fund itself, It is repeatedly asserted here,
kept on deposit in the state banks. c
course each bank in the system will hav
a fair right to claim that its share OF III
guaranty fund be deposited with itsel
= and when this is done the law in its oper5
ton Will have exactly described a circ
and the depositor will have exactly I'll
security he had before the fund wa
created.
ARMY OF SPEAKERS IN DAKOT.
i