Herald and news. [volume] (West Randolph, Vt.) 1878-1943, 1908-09-24
GUARANTY OF DEPOSITS.

At the risk Of getting into trouble with
our Republican brethren, who may hold
this to be an inopportune moment to
find anything good in the opposition,
we are going to say that the plan OF gov
eminent guaranty OF national bank de-
posits proposed in the Democratic plat
form on the whole rather commends
itself to our judgment. 1t is not essen
TALLY Democratic doctrine, and therefore
bound to invite the arrows of the Repub-
lican press, without further question.
Until the Democrats sequestered il and
put it into their platform, good strong
Republicans and fnanciers OF both par
ties found merit in it. Indeed, the idea
was included in Congressman Fowler's
currency reform bill in the last House,
which was strongly supported in Con-
gress by Republicans. Up to then, it
was . non-partisan question. II the
plan had merit then, 1t has no less now,
simply because the Democrats, instead OF
the Repu biicans, pronounce for 1t.
1t is . misnomer to call 1t government
guaranty of bank deposits. 1t is rather
q compulsory joint bank insurance OF
deposits under government direction.
The scheme Is that each national bank
shall place one per cent of its deposits at
the order of the government, to serve as
guaranty fund. When q bank fails, this
fund shall serve Is insurance to the de-
positors in that bank. They shall be
paid Immediately from it, IL they desire,
by the federal appointee named to wind
up the banks AFFAIRS. When this latter
service is completed, and the banks
assets realized on, the receipts are turned
back into the guaranty fund to make
good, in whole or in part, the void caused
by paying the depositors. II this is not
sufficient, there is still the double lisbi,i-
ty of the stockholders, the same as at
present, 80 that ii would be unusual for
the fund to be exhausted.
This guaranty plan is not merely
thoroughly successful, trial in the new
state of Oklahoma, where it applies to
state banks only. II did include such
national banks o. cared to come in volun-
tarily, and many did, but the attorney
general ruled that the state could not ex
ercise such control over banks chartered
by the federal government, and so most
Of the national banks dropped out, al.
though some were 90 well satisfied that
they surrendered their charters and be-
came state banks rather than give It up.
The general effect in banking has been
splendid. The banks in the new state
have swelled their deposits tremendously,
somewhat at the expense of those OF
neighboring states, whose depositors
have transferred their accounts so a. to
get the benefit Of the guaranty. Since
the law was passed, only two banks in
Oklahoma have failed. Their depositors
were paid immediately, with no loss OF
time or interest, and the banks, when
wound up. restored the full amount
taken to the guaranty fund. SO well has
the Oklahoma plan worked that other
states are considering its adoption.
1t seems to many a Iaym.n that there is
screw loose somewhere in this bank
ing business. A bank is supposed to be
place whore you can deposit money ct
your convenience and get it at your pleas
ure. Ordinarily, this is the way. but
there come times when the banks cannot
with safety honor drafts OF their deposit