The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1908-08-28
A Striking Contrast.

a striking Contrast.
4 The Oklahoma plan is better. A \
= bank recently failed in Oklahoma; y
\ within forty-eight minutes after the =
2 notice of suspension, the officer in 4
= charge had authority to pay all de- 4
y positors, and then the banking board y
= proceeded TO collect the assets of y
= the bank and to prosecute the Of 4
= was closed up. the stockholders y
4 passed a resolution thanking the \
= state board for its prompt action. y
y the action of the board being a pro- y
+ lection to the stockholders. as well y
7 as to the depositors and to the pub 4
y lie generally.
Compare this failure under the y
= guaranty system with a failure y
4 lahoma the bank commissioner tel 4
y ephoned the farmers TO come in and y
y get their money. and the answer was, y
y Il am busy with my crop; l will y
= be in in a day or two y
' In Cleveland. O.. a bank failed \
y about the same time. and the papers
= announced Twelve hundred infuri- y
4 ated Italians stormed the closed +
y doors of the busted banking house y
y OF COstan Liopea on orange street, 4
\ today. The police drove the crowd =
\ back"
An objection is sometimes made to the
guaranty law that a new bank would
start up across the street and, being
able TO promise its depositors absolute
security through the guaranty law, could
draw the deposits away from conSerVa-
lively managed banks, by offering a high
er rate of interest than the latter could
pay. This objection is urged as II 1t
were an unanSwerable one. But let US
see how easily ii can be met. Since the
law makes all of the banks liable for the
obligations of each bank, the law should
prohibit any abuse of this security by any
bank. and in Oklahoma the banking board
has already fixed the rate Of interest that
can be paid to depOsitorS. According to
the rules of the banking board no bank
is permitted to pay more than per cent
on short time deposits or more than 4
per cent on time deposits running for six
months or more.
One of the Objections.
It has also been urged as an objection
that under the guaranty system a big
bank would have no advantage over
little bank. Even If this argument We're
sound, ii could not weigh against the
advantages of the system, for banks are
made for the people. not the people for
the banks While there are advantages
in having big banks, the advantages are
not sufficient to justify the JeopardizinS
of the depositOr or of the business inter-
ests of a community.
But as a matter of fact, the big bank
would still have several advantages over
the small one. In the first place, IL could
make larger loans than the small bank.
For instance, a bank with sl,OO0.OO0 CAPT
5000 to one person, while bank with
500. 900 capital and surplus could only loan
$40 600 to one person. This advantage
would in itself draw to the large bank
the large deposits and the men doing bust
ness upon a large scale, for deposits fol-
low accommodations.
Then, too, there is certain business ad-
in depositing with a big bank.
II Is worth something to be able to refer
to big bank when ones financial stand
ing is being investigated, and worth still
more to have the advice of a man of
large business experience when business
are being considered.
Besides these there is a social advantage
In being on good terms with the men who
are prominent in the banking world. Sure
" the big banks prestige will be worth
enough TO 1t under the guaranty system;
il should not begrudge the smaller banks
the advantage which the guaranty depos-
its will bring to them.
cannot pass from this subject without
to the fact that the big bank
needs the guaranty as well as the little
one, for big banks fail as well as small
banks, and the bigger the bank the greater
the calamity to the community when II
fails No bank is so big to be abso-
lutely beyond danger and a community
needs protection against the big banks
failure even more than against the fail
ure of the small banks.