The daily Gate City. [volume] (Keokuk, Iowa) 1855-1916, 1908-10-06
DEPOSIT GUARANTY EFFECT ON
SMALL sTocKHoLDER.

The effect of a bank deposit guar
anty law upon the smaller stockhold-
ers in banking establishments is in
formingly discussed in an article by
Thomas P. Kane, deputy comptroller
of the currency. The impression
seems to prevail that the capital stock
of banks is owned largely by the di-
recters and officers and few share
holders Deputy Comptroller Kane
says that anyone who has inspected
the lists of stockholders in national
banks knows that in large majority
of cases the stock is very widely dis
tributed and that the board of direc-
tors and managing officers own but a
small proportion of the total shares.
In many instances the directors own
only the minimum number of shares
that the law requires them to hold,
which. in national banks, is five or
ten shares each, according TO the
amount of the banks capital. Mr..
Kane writes:
These stockholders, as rule, are
people of limited means, who have &C
cumulated few hundred dollars each,
by dint of economy and self denial.
Widows. orphans and estates are very
largely represented. While such in
vestments represent part OF banks
working capital, so far as the stock
holder is concerned, they really par
take of the nature of savings The
depositor may draw out his funds ar
any time The stockholder cannot al
ways find ready buyer for his stock
when he wants TO dispose OF IL
Shareholders OF this class have no
more voice in the management OF the
bank and know nothing more OF its
condition than the depositors.
IF we are going into the business OF
securing investments. why not protect
the stockholders of this class as we'll
as the depositor? Why discriminate
between them?
'sThe losses to stockholders in such
of the failed national banks as lave
been finally Inundated since the be
ginning of the national system
amounts to more than 10 per cent OF
the total capitalization of such banks.
HIS uOrS HUI AltiuuS 1880 AS1h.taAiS
from impairment of capital of solvent
associations which the stockholders
were required to make good by assess
ment on their stock.
notwithstanding this fact. the de
post guaranty scheme proposes IL
further impair the investment of the
minority stockholder by making hin
liable not only for the losses in his
own bank. but also for his proDor
Iticnate share of the deposit liabilities
+ of every other bank in the system OF
which his association forms part
This proposition. therefore. mightil,
concerns the numerous minority stock
holders in the banks throughout the
country and should arouse their inter
est and opposition
Deputy Comptroller Kane points on
( very clearly and conclusively tina
! guaranteeing deposits will not max
banks any more safe or sound nor pre-
vent or lessen the number of failure:
II will not make bank examination
any more thorough or official supeI
visions any more effective 1t Will nc
insure better judgment on the part {
the bank officers. nor make their loan
or investments any more secure.
will not convert an injudicious c
speculative banker into prudent G
conservative officer. Mr. Kane say
in conclusion:
The word pictures. therefore. {
poverty and restitution resulting frol
national bank failures. II will be reet
iIy seen, are very much oyerdrawn an
are not true 20 nature. But # the r,
verse were the case the uinori,
shareholders have been the create
sufferers and have sustained II
greater losses They have not onl
, lost the principal OF their investmeT
but have had to bear in addition Their
70 their pro rata share, according
their stock holdings, OF the deficienc
IN the banks assets necessary TO me-
The liabilities TO depnsitors. even
the extent OF morrgaging their hons
? or having them sold over their head
70 satisfy judgments for the amour
Of assessments
HARD TINES MAKE CRIMINAL