The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1908-10-09
Will PREVENT PANICS.
SENATOR owen, OF OKLAHOMA, ON
THE GUARANTEE OF DEPOSITS
Strong Statement in Favor Of fine
Democratic Plank.

/ ! u.
Owen of Oklahoma, stopped over in
Chicago on his return to Oklahoma
from Colorado. where he has been for
the past month. Senator Owen thinks
Colorado will enlist as a Democratic
state this wear. Before departing for
Oklahoma to take part in the cam
paign he made some interesting sug-
gestions relative to the operation and
effect of the Bank Guaranty law of
Oklahoma. 1t will be remembered that
he vigorously presented in the United
States Senate the proposition to guar
antee the deposits of the National
banks of the United States.~ He favors
a guarantee fund to be composed of
I the present tax on national bank cir
culation which he says is far more
! than sufficient.
Senator Owen has been in the bank
ing business for eighteen years and
his opinion is from the bankers view
| point
He said: THE Oklahoma banking
| law does not provide for state guar
antee. 1t does not impose an unlimit-
| ed liability on the banks. 1t only pro-
vides a bankers guarantee fund equal
! to the sum of one per cent of the aver
| age annual deposits of the state
| banks. From this fund is paid in
| stantly the depositors of any insolvent
state bank There has been only one
bank failure since the state was es-
| tablished
In this case the officers of the state
bank were borrowing its funds with
out security The closing of the bank
saved the stockholders a greater loss
which they would otherwise have suf-
fered. The depositoTs were instantly
paid, and it cost the guaranty fund
nothing whatever, the losses of the
bank falling upon the banks own
funds; moreover, the business people
of the town were not disturbed"
Even the guaranty fund is redepos-
tied with the contributing banks in
Oklahoma, where they deposit with
the state statutory collaterals."
"The guarantee fund plan is bene-
! fetal to the state banks as follows:
1.-The guarantee fund plan is bene-
fetal to the state banks as follows:
First: 1t has increased their depos
| its several million dollars, considera-
BILE part of which is money previous
| ly boarded by people afraid of any
| bank.
| Second: The depositor being guar
anteed, the banker has no fear of a
run. He therefore need not carry an
unusually large cash reserve. He may
thus make larger loans, accommodate
more borrowers and increase his earn
ing power.
Third: The guaranty plan gives
the banker greater peace of mind, pre-
vents his pressing a weak creditor
unduIy, encourages him to extend &C
commodation required by commerce,
for he has no fear of his frightened
depositors calling him to sudden set
Element.
Fourth: There being no danger of
financial panic under this system the
banker would never fear the reserve
cities refusing to deliver his reserve
on demand.
Fifth: Panics being thus avoided,
the stability of our National commerce
would not be disturbed and the bank
er would be benefited both by a sta
BILE line of deposits and a stable line
of demand for credits of which the
banker is the purveyor.
Sixth: The bank deposits would be
increased under this system from thir-
ty to forty per cent. Every dollar in
currency in the national banking sys-
tenn means ten dollars of deposits and
ten dollars of bills receivable, as ap-
pears from the reports of the Comp
troller of the Currency for the last
thirty years. The money in hiding
or in boarding, outside of pocket
change, is estimated at between thir-
ty and forty per cent of the currency
actually in bank, and if this money
were brought out of boarding, as il
would be by the guaranty plan, and
digested by the banks, it would NEAR
an increase of deposits of about thirty
per cent. and an increase of bank cred
it's extended to commerce of as much
more. This would mean renewed
prosperity and what is of more i'm
portance it would mean stability.
The theory that corrupt banker
could profit by the guaranty fund has