The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1908-01-10
NOT RIGHT KIND.
Mr.. Royce Doesn't Approve
Oklahoma Banking Law.
Bears Every Indication Of Being
Hastily Drawn.
OUTLINES HIS PLAN
Would Make Levy of One Per
Cent Of Deposits.
This Would Be Paid in Ten
Annual Installments.


does not approve Of the provisions of
the guaranty deposit law passed by the
legislature of Oklahoma, and will not
recommend a law of that kind to the
coming special session of the legislature.
''The Oklahoma law" says Mr.. Royce,
''bears every indication of having been
drawn and passed in great haste. 1t
seems to be pieces of several other
laws hastily patched together. For ex-
ample, the first paragraph of the law
makes it absolutely obligatory on every
bank in the state to come in under the
provisions of the law, while further on
is paragraph which implies that banks
are not obliged to take advantage OF
the law if they prefer to stay out
Neither does the Oklahoma law make
any provision for taking care of the
fund to be collected by the state, nor
for collecting interest on the fund
Il have certain ideas on the subject
which expect to embody into bill. L
don't know who will introduce that bill,
but understand that several measures
are being prepared. Senator Quincy
has one, I understand, and also Senator
Waggener There will probably be five
or six proposed plans. and the legis-
lature must select the one that seems
best to it.
Mr.. Royce's Plan.
my plan, in a general way, is as fol-
lows:
81 propose that the state treasurer
and bank commissioner be made the
custodians for this fund. Let a levy Of
per cent be made on a the baass
which take advantage of the provisions
of the act. A one per cent levy will at
once put into the fund about a million
and a half Of dollars. But it might be
somewhat of hardship for bank to
iEe oil of
once. For instance, the Bank OF To-
peka would have to put up $4,000. So
propose to arrange it this way: each
bank will put UP the per cent in cash,
but will be allowed to retain, credited
to its reserve nine-tenths of that sum-
The money will actually be in the state
treasury, but it Will be credited to the
banks reserve fund.
"The second year I propose that an
other tenth of the deposit be transfer
red absolutely to the state, the third
year another tenth. until, at the end of
ten years, the banks Will have PAID over
to the state the full amount Th1s Will
make it possible for the banks to pay
the one per cent in ten 1nstallments,
instead of all at once as is required of
the Oklahoma banks, while at the same
time 1t will make the entire fund of
million and a half dollars available as
guaranty fund during the ten years.
'I propose that this m1ilion ana a
state funds by the state depository
banks. 1t will not be tied up in the
vaults, but will be redeposited. with the
bonded state banks, and will draw 2
per cent interest be paid back to the
banks which make the deposit in the
form of yearly dividend.
"In case of a bank failure, the
bank commissioner would at once
take charge of the failed bank. He
;r% rn0aiUar
thought the assets were insufficient to
lfouidate The receiver would make
a list of all depositors and their
credits, and after paying out all the
banks funds, would pay off the bal
ance out of the state guaranty fund.
The assets of the bank would then
he converted into cash. and the money
restored to the state. If the bank was
in good shape, my plan would be TO
simply have the bank commissioner
appoint a special deputy instead of a
receiver and liquddate the oank.
'In case at any time the guaranty
fund should fall below one per cent
of the average daily deposits of the
Kansas banks, the state treasurer and
bank commissioner would have
authority to draw on the banks to
make up the dehclt, IN propoftlon TO
their daily balances.
sI do not believe there would be
the slightest danger from wild cat
banks In the first place I favor
provision which would eliminate all
deposits bearing over 8 per. cent in
terest from the benefits Of the
guaranty. This would prevent a new
bank dragging away deposits from an
old bank by raising rates of interest.
The fact that each bank was
guaranteeing the business of all the
other banks is in itself guaranty
against wild cat banking. The bank
ers themselves know the condition of
other banks better than anybody else.
They probably know so days before
this department when bank is
shaky Under present conditions, no
bank has anything to gain by report
ing the condition of the shaky bank.
and irving to straighten 1t up. Rather
it is to the interest of a bank, pos
sibly, to have its competitor fail. Now.
however, as soon as banker dis
covers that some other bank is not
doing a straight, safe, legitimate busi-
ness. he will either go to that bank
and demand that the wrong practices
cease or he will report to this depart
ment, and have an inspector sent to
the shaky bank"
Summary of Oklahoma Law.
The Oklahoma law was approved by
Governor Haskell on December II.
Printed in pamphlet form it takes
| about six ordinary sized pages.
Section 1 provides that a state bank
| ing board is created composed of the
| governor, lieutenant governor, pres;-
| dent of the state board of agriculture,
state treasurer and state auditor.
| Section 2 says that within so DAYS
| the state banking board shall lew
against the capital stock an assess
ment of 1 per cent of the banks daily
| average deposits. less the deposits Of
state funds properly secured. for the
| preceding year. upon each and every
| bank organized under state laws, for
the purpose Of creating depositors.