Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1908-10-08

n 4 Why not make the depositor secure
v The United States government require
I the deposit of specific security when
. entrusts money to a national bank, al
though it can examine the bank at an
time the state requires security when
deposits money in a bank; the count,
REQUIRES security and the city require
) security; even the banks require %securit.
f from the officials who handle money
Why should the depositor be left to TAX
his chances?
Not only is the depositor without pro
lection, but the security given to nation
state, county n city lessons his secur
ity. They are preferred creditors; thel
have q mortgage on the gilt-edged as
sets and the depositor must get alonl
as best he can with what remains. Why
are the interests of depositors thus neg
lected?
A bank asks deposits On the theory
that the depositor is sure of the return
of his money, and The laws ought t
make the facts conform to the theory
The depositor, the community and the
banker himself will be benefited by legis'
lation which will give to every depositol
the assurance that that which is COM
mitted to the keeping of the bank will
be available to meet his needs at any
time. Such is not the case today, for
while all banks are reasonably secure,
they are not absolutely so. This state
ment can be verified in several ways.
First: The President has advocated a
postal savings bank, and his postmaster
general, in presenting an argument in its
favor, pointed out that many millions
are sent to European savings banks
every res by Americans of foreign
birth, who prefer to trust the state in
situations of the nations beyond the sea
rather than the private banking institu-
lions here.
Second: 1t is known hat a consider
able amount of money Is in hiding, the
amount increasing with the approach of a
panic or pushes depression. This money
is not only withdrawn from active use,
but is likely to be withdrawn just at
the time when money is most needed and
when the withdrawal will increase the
financial disturbance. 1t is impossible to
reason with fear; 1t is futile to tell men
that they will probably get their money.
The moment the depositors suspect a
bank, they hasten to destroy its solvency.
Distrust, and distrust alone, can explain
the hiding of money.
Third: The increase in the issue of
money orders, payable to the order of
the purchaser, is another evidence that
| people are seeking greater security for
terest pom deposits, and yet those who
buy money orders prefer to lose the in
terest, and, in addition to that, pay the
price of the money order to secure the
governments guaranty.
Fourth: National banks confess that
their banks are not secure when they
oppose the guaranty of state banks on
the ground that it would lessen the de-
posits in national banks; and state bank
ers confess hat their banks are not Sc
cure when they oppose a national guar
anty system on the ground hat it will
draw deposits away from state banks.
If you want to find whether banks are
absolutely secure, ask the directors to
give you their personal note to secure
your deposit and you will learn that they
will not bear the risk which they ask you
to bear.
Fifth: The experience of Oklahoma
furnishes conclusive proof that deposit
tors do not feel that their money is safe
in unsecured banks. On the 18th of De-
cember, 1907, the Oklahoma legislature
enacted a depositors' guaranty law,
which became operative February 18th,
1908. BY the provisions of this law, ali
as desire to avail themselves of the law,
are taxed one per cent on their deposits,
and the money thus collected is put into a
guaranty fund. The banking board is
authorized to make additional assess
ments from time to time to keep the
fund up to this amount, and is directed
to take possession Of any insolvent bank,
pay the depositors in full, and reimburse
the fun by collecting the assets Of the
failed bank. Five hundred and fifty-five
banks, including ffty-four national
banks, had come under the provisions of
this law On the 18th of last May, leav-
ing but 255 unsecured banks Gall NATIONALLY
In the state. Statements are made by
the banks in December and May. Be-
gained In deposits 81, 2Sf, 765. %, while the
unsecured banks, all national, showed a
decrease in deposits of 81, 101, S07.S6. A
large part of this increase represented
money brought from hiding or from with
out the state, but the decrease in the
unsecured banks can only be explained in
one way. A large number of depositors
withdrew their money from the unse-
cured banks, and deposited it in the Sc
cured banks. and this, too, in spite of
the fact that in order to prevent with
drawals. the unsecured banks, in some
instances, offered a higher rate of inter-
est than the secured banks were permit
ted to pay; and 1t must be remembered
also that the banks which suffered a loss
of deposits were all national banks. And
to make 1t certain that the difference was
caused by the guaranty law, the Sc
cured national banks gained, while the
unsecured banks lost. While the deposits
were increasing in the guaranteed banks
of Oklahoma, they were failing In the
state banks and trust companies Of Kan
sas-the decrease being 81, 1853. 026.z7 be-
tween March 31st and June 18th.
No amount of criticism of the timid
depositor can change the facts; the peo-
curity b the laws at present give
them. They will change banks to get
more security, and II necessary, they |
will send their money to another state.
For many years efforts have been made |
In Congress and In the various states to
secure a law guaranteeing deposits, but
the influence of the great banking insti- |
buttons has been sufficient to prevent ac-
ton. Last fall. however, when the
banks, by a concerted action, suspended
payments on checks, the depositors were
everywhere brought to a realization of
the fact that their deposits are, In fact,
loans, payable on demand under ordl-
nary circumstances, but payable at the
will of the bank In emergencies. The
depositors suffered a considerable loss
during the suspension of payments, and
they "a not forgotten the lesson which
they then learned. The Democratic party, |
being more free than the Republican |
party to respond to the needs of the
masses of the people, inserted the fol- |
lowing plank In its national platform:
I'VE pledge ourselves to Legislation by |
which the national banks shall be re-
quired to establish a guaranty fund for
the prompt payment of the depositors
equitable system which shall be avail
able to all state banking institutions
wishing to use It"
This principle has been applied in Ok
lahoma and the results have been very
satisfactory. The average annual loss |
to depositors in national banks during |
the last forty years has been less than |
one-tenth Of one per cent of the deposits, |
and the loss to the fund In Oklahoma, |
under better regulations and restrictions, |
has been absolutely nothing during the
six months IL which the law has been in
Tha Par,,httnau ry.txo-- a 49,. II |