Mexico Missouri message., 1908-10-01
GUARANTEED BANKS.
BY William Jennings Bryan, Topeka, Kansas, August
II, 1908


Why not make the deposition secure?
The United States government requires
the deposit OF specific security when II
entruats money TO national bank, At
though Il can examine the bank at any
time the state requires security when
Il deposits money In n bank; the county
requires security and the city requires
security: even the banks require Hecur-
lty from the officials who handle money.
Why should the deposltor be LETT to take
Not only is the deposItor without pro-
lection, hut the security given TO nation.
state. county and city lessons his Sc
curity. They are preferred creditors
they have n mortgage on the GIT edged
as best he can with what remains. Why
are the interests Of deposltors thus neg
lected?
A bank asks deposits on the theory that
the depositor In sure OF the return OF his
money. and the laws ought to mike the
facts conform TO the theory. The de-
positor, the community and the banker
himself will be benefited by legislation
which will give 60 every deposItor the as
surRnce that that which In committed TO
the keeping OF the bank will be available
TO meet his needs Mt any time, such Is
are reasonably secure, they are not abb
solutely so. This statement can be veri-
fed In several ways.
First: The President has advocated
postal savings bank and his postmaster
general. In presenting an argument In It's
favor, pointed out that many millions are
sent TO European savings banks every
year by Americans OF foreign birth, who
prefer to trust the state institutions OF
the nations beyond the sea rather than
the private banking institutions here.
Second Is known thq1 S SGhs,aer" ,hs
amount increasing with the approach OF
a panic or business depression. This
money is not only withdrawn from ac-
tive use, but 10 likely to be Withdrawn
Just at the time when money Is most
needed and when the withdrawal will In
crease the financial disturbance. II ~
impossible TO reason with fear Il - futile
to tell men that they Will probably get
their money. The moment the deposltors
suspect n bank. they hasten 90 destroy
Its solvency. Distrust, and dlstrnst
alone. can explain the hiding OF money
Third: The increase in the issue OF
money orders, payable to the order OF
the purchaser, II another evidence that
people are seeking greater security Tor
their money. The banks will pay an In
terest upon deposits, and yet those who
buy money orders prefer To lose tho In
tcfest and, In addition 10 that. pay the
price Of the money order to secure the
Fourth: National banks confess that
their banks are not secure when they
oppose" the guaranty OF state banks on
the ground that IL would lessen the de-
posits in national banks. and state bank
ers confess that their banks are not Sc
cure when they oppose national guar
draw deposits away from state banks.
II you want TO find whether banks are
absolutely secure, ask the directors 20
give you their personal note to secure
your deposit. and you viii learn that
they win not bear the risk which they
ask you 10 bear.
Fifth The experience OF Oklahoma
tors DO not feel that their money Is safe
in unsecured banks. on the 18th OF De-
oember, 1900, the Oklahoma legislature
enacted depository guaranty law, which
became operative February Attn. 1908. BY
the provisions OF this law, all state
banks, and as many national banks rs
desire 10 avail themselves OF the law,
are taxed one per cent on their deposits,
and the money thus collected IL put into
n guaranty fund. The banking board r.
authorized to make additional assess-
mepts from time 20 time to keep the fund
up 20 this amalint, and Is directed 70
take possession OF any insolvent bank,
pay the depostors in full, and reim-
burse the fund by collecting the assets
OF the failed bank. Five hundred and
tional banks. had come under the pro-
visions OF this law on the 18th OF last
May. leaving hut 2S5 unsecured banks
Gall nationally In the state. Statements
are made by the banks In December and
May. Between these periods the secured
banks gained in deposits 81. 257, Td5.22.
while the unsecured banks. oil national.
showed a decrease in deposits OF si.l0i. :
S0.s6. A large part OF this Increase rep
resented money brought from hiding or
from without the state, but the decrease
planned In one way. A large number Of
deposltors Withdrew their money from
the unsecured banks, and deposited II In
the secured banks, and This too In spite
dfnwHlf. ehe unsecured banks, In some
instances, offered a higher rate OF In
terest than the secured Banks were per-
mitted 90 pay ana II TuuEt be remembered
also that the banks which suffered a loss
OF deposits were all national banks And
to make Il certain that the difference was
caused by the guaranty Law the secured
cured banks lost. While the deposits
were increasing IN the guaranteed banks
OF Oklahoma, they were falling in the
state banks and trust companies OF Kan
sas-the decrease being Il. tbs. Oes27 be-
tween March aist and June 18th.
No amount OF criticism OF tho timid do
posltor can change The facts the people
than the laws at present give them.
They will change banks TO get more So
curity. and. II necessary, they viii send
For many years efforts have been made
In Congress and IN the various states b
secure n law guaranteeing deposits. but
ne lniipsnes % ne grsas banking inssi-
ton. Last fan. however, when the
banks. by concerted action, suspended
payments on checks, the depository were
Il WV yNHtNg 0N0IkHA ~ - NeuAlAlAAA1A ~
the fact THAI theIr deposits are. in fact,
/ loans. payable on demand under ordinary
circumstances. but payable az the viii
OF the hank IN emergencies. The dopoai.
tors suffered a constderabie loss d1rine
/ the suspension OF paymenta. and thes
have not forgotten The lesson which theJ
then learned. The Democratic party. be
/ ing more free than the Republican party
10 respond 10 the needs OF the noeael
Of the people, inserted the folloWtn1
PLANK in is national platform:
which the national banks shall be re-
| quired 70 establish q gnnmnty fund 4ol
/ any insolvent national bank. un6or a.
/ equitable system which shall BE- avail
able 40 al state baniing institution,
T iriii' ..priacIpla has bsan applied IN on
1 lahomae and the results have been gorl
| satisfactorily. The average annual less q
dcposltofs IA NATIONAL banks during IN
tenth of one per cent 0f thn deposits. and