The Rice belt journal. (Welsh, Calcasieu Parish, La.) 1900-19??, 1908-09-04

This principle has been applied in Okla
homa and the results have been very
satisfactory. The average annual loss 10
depOSitors in national banks during the
last 40 wears has been less than one-tenth
of one per cent. of the deposits, and the
loss to the fund in Oklahoma under pet
ter regulations and restrictions mas beeh
absolutely nothing during the six months |
in which the law has been in operation.
The Republican platform is silent on
the subject and the Republican candl-
date not only does not advocate COM
puIsory system. but specifically ana en-
phatically opposes it. He says;
THE Democratic platform recommends
tax upon national banks ana upon
such state banks as may come IN, IN the
nature of enforced insurance to raise
guaranty fund to pay. the deposltors Oh
any bank which fails.
And then he questions the right OF the
government to enact such a law, say
ing:
Glow state banks can be included in
such scheme under the constitution IS
left in the twilight zone of state rights
and federalism so frequently dmming the
mean ng and purpose Of the promises OF
the platform. If they come in under
such system, they must necessarily |
be brought within the closest national
control, and 50 they must really cease to
be state banks and become national
banks" -,
His solicitude for the state bank will
hardly impress the country, for he is
quite Indifferent to states and their re-
served rights when be deals with other !
Subjects When congress is in the con
troll of those who want to leglSlate Tor |
the whole people rather than for the few, |
it will not be difficult to frame law |
under which state banks can avail them |
selves of the advantages Of a federal law |
guaranteeing the deposits of national
banks, just as it was easy in Oklahoma
to frame a law which permitted natlonai
banks to take advantage Of the state
guaranty system. 1t Will also be easy
to enact a federal law which will permit
national banks to avail themselves OF
state guaranty systems until a national
system can be secured. Atty.-Gen. Bona
| parties ruling, whether it correctly IN
| tcrprcts the law or not. would not bring
| such CONSERVATION as it does if the Re
publican candidate favored law allow
! ing national banks to take advantage or
| state systems for the protection of de-
postOrs but Mr.. Tafts hostility to all
| guaranty systems is shown in the OBJ
! lection which he offers:
! THE proposition is to tax the honest
and prudent banker to make up for the
dishonesty and imprudence of others NO
| one can foresee the burden which under
this system would be imposed upon the
! sound and conservative bankers of the
| country by this obligation to make good
| the losses caused by the reckless spec
ulative and dishonest men who would
| be enabled to secure deposits under such
system on the faith of the proposed
| insurance, as in its present shape the
| proposal would remove all safeguards
against reckleSSneSs in banking. and the
chief. and in the end, probably the only
benefit would accrue to the speculator,
who would be delighted to enter the
| banking business when 1t was certain
that he could enjoy any profit that would
accrue, while the risk would have to be
assumed by his honest and Woodworking
fellow"
He even pictures dire disaster and de-
clares that ''if the proposal were adopt
ed exactly as the Democratic platform
suggests, 1t would bring the whole bank
ing system of the country down in ruin
AS an afterthought he suggests that a
voluntary system might be tolerated, but
as his objections to compulsory sys-
! TEN apply just as we'll to a voluntary sys-
: TEN we may fairly count him against
the guaranty of depositors
The chief cause Of bank failures Is the
making of excessive loans TO directors or
officials of the bank. This is the fruitful
3 cause of disaster and it has been impos-
sible to secure legislation protecting
banks from their own officials and d.
r rectors. Why? Because there has been
, no mutual responsibility. When all banks
: become liable for the deposits Of each
the stockholders will insist upon the en-,
> offense for a bank official to loan more
!, than the prescribed amount to one in.
' dividual At present we have law pro.
, hibitng the lOaning of more than one
: tenth Of the capital and surplus to one
person or corporation, but the law Is
: only directory. OF course, the comptroi'
! Ter can suspend bank If it violates the
o law. but the law Is not enforced, be-
cause the enforcement of such law
, would throw the punishment upon limo
I 80 a. k,f,t ot,l fhA 1f,,ff
. nifty, since the suspension of bank in
flictS great loss upon stockholders ant
= disturbs the business of the city or towr
e in which the bank is located.
! The law should make it a criminal Of
), Tense to loan more than the prescribed
E amount to one person and we would
. probably be able to secure the passage o
= a law prohibiting market peculation b.
;. bank officials.
0 The Oklahoma plan is better. A banl
5 recently failed in Oklahoma; within 4
= minutes after the notice of suspension
e the officer in charge had authority to pa.
o all depostors, and then the bankin,
s, board proceeded to collect the assets 0
g the bank and to prosecute the official
e closed up. the stockholders passed reso
a luton thanking the state board for it
" prompt action, the action of the boar,
% being a protection to the stockholders
e as well as to the deposit0rs and to tn
~ | puDllC SeneTdlly.
e An object is sometimes made to tn
:, guaranty law that new bank wou
"a start up across the street." and. bein
re able to promise its depositors absoIut
It security through the guaranty law, coul
y draw the deposits away from conserva
Re lively managed banks, by offering a high
a err rate of interest than the latter coul
Y. pay. This objection is urged as If
W were an unanswerable one. But let u
s. see how easily it can be met Since tn
s. law makes all Of the banks liable for tn
n obligations of each bank, the law Shout
p prohibit any abuse Of this security b
"a any bank. and in Oklahoma the bankin
"a board has already fixed the rate of inter
II est that can be paid to depositors. AC
IS cording to the rules of the banking boart
1t no bank is permitted to pay more tina
IN three per cent on short time deposit
he or more than four per cent on time dc
IS posts running for six months or more
t. Why has the Republican party bee
he so quick to respond to the demands G
y Wall street and so slow to yield to tn
st demands Of the masses? There are tw
S reasons: First, the Republican party ha
lie allowed itself to become the servant {
the favOr-seeking corporations, and, sec
Id ond, too many Republican leaders loo
D. at questions from the aristocratic stan(
E. point, the standpoint of the many. The
re legislate upon the theory that societ
ct is suspended from the top, and they fai
~ therefore, to understand either the evil
e. that affiict the body polite. or the RENE
lie dies that are needed. The Democrat