The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1908-08-28
William J. Bryan on Guaranty
Bank Deposits.
People Are Seeking Safer Places
for Money.
POINTS TO OKLAHOMA.
Proof That Depositors Are
Seeking Security.
Question of Postal Savings Banks
or Guaranteed Funds.

Mr.. Bryan's speech at the auditor
ium last night was as follows:
Mr. Chairman, Ladies and Gentlemen:
Why not make the depositor Sc
cure? The United States government
requires the deposit of specific secur-
ity when it entrusts money to ma
tional bank, although it can examine
the bank at any time; the state re-
quires security when 1t deposits money
In a bank; the county requires secur~
fly and the city requires security; even
the banks require security from the
officials who handle money. Why
should the depositor be left to take
his chances?
Not only is the depositor without
protection. but the security given to
nation, state. county and city lessons
his security. They are preferred cred
itors; they have a mortgage on the
gilt edged assets and the depositor
must get along as best he can with
what remains. Why are the interests
OF depostors thus neglected?
A bank asks deposits on the theory
that the depositor is sure of the return
OF his money, and the laws ought to
make the facts conform to the theory.
The depositor, the community and the
banker himself will be benefited by
legislation which will give to every
depositor the assurance that that
which is committed 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 alb
solutely so. This statement can be
verified in several ways.
First-The president had advocated
a postal savings bank, and his post
master general. in presenting an ar
gument in it's favor, pointed out that
many millions are sent to European
savings banks every year by Ameri-
cans of foreign birth who prefer to
trust the state institutions of the ma
tions beyond the sea. rather than the
private banking institutions here.
Second-It is known that consider
able amount of money is in hiding. the
amount increasing with the approach
of a panic or business depression. This
money is not only Withdrawn from ac-
tive use but is likely to be Withdrawn
1ust at the time when money is most
needed and when the withdrawal will
increase the financial disturbance. 1t
is impossible to reason with FEAR; IL Is
futile to tell men that they will prob
ably get their money. The moment
the depositors suspect a bank, they
hasten to destroy ita solvency. Dis
trust, and distrust alone, can explain
the hiding of money.
Third-The increase in the issue of
money orders, payable to the order or
the purchaser. is another evidence that
people are seeking greater security for
their money. The banks will pay an
interest upon deposits. and yet those
who buy money orders prefer t. lose
the interest and, in addition t. that,
pay the price of the money order In
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 chat it would lessen the de-
posts in national banks; and state
bankers confess that their banks are
not secure when they oppose a nation
al guaranty system on the ground that
Il 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
20 secure your deoosit and you Will
learn that they will not bear the risk
which they ask you to bear
Experience of Oklahoma.
Fffth-The experience Of Oklahoma
furnishes conclusive proof that deposit
tors do not feel that their money Is
safe in unsecured banks. On the l1th
Of December, 1907. the Oklahoma legis-
lature enacted a depositors' guaranty
law, which became operative February
4 1908. BY the provisions of this law,
all state banks, and as many nationai
banks as desire to avail themselves OF
the law, are taxed 4 per cent On
deposits and the money thus collected
is put into a guaranty fund. The bank
ing board is authorized to make addi-
tional assessments 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 fund by col
lecting the assets of the failed bank.
Five hundred and fifty-five banks, in
cludiSg 54 national banks, had come un-
der the provisions of this law on the
14th of last May, leaving but 255 unse-
cured banks Gall nationaD in the state.
Statements are made by the banks N
December and May. Between these
periods the secured banks gained in
deposits s4237 .675.22 while the unse-
cured banks, all national, showed a de-
crease of deposits of 81, 101 ,s07. S6. A
large part of this increase represented
money brought from hiding or from
without the state, but the decrease in
the unsecured banks can only be ex-
planned in one way. A large number
OF depositors withdrew their money
from the unsecured banks. and depos-
tied II in the secured banks, and this
too, in spite OF the fact that in order
to prevent Withdrawals, the unsecured
banks. in some instances, offered a
higher rate of interest than the secured
BANKS were permitted to pay; and it
must be remembered also that the
banks which suffered a loss of deposits
So