The log cabin Democrat. [volume] (Conway, Ark.) 1901-1982, 1908-09-03


depositors in national banks during the
last 40 years has been less than one-tenth
of one per cent. Of the deposits, and the
loss to the fund in Oklahoma under bet
ter regulations and restrictions has been
absolutely nothing during the six months
in which the law has been in operation.
Tho Republican platform is silent on
the subject and the Republican candi-
date not only does not advocate a COM
pulsory system, but specifically and en-
phatiCallV opposes it. He says
The Democratic platform recommends
tax upon national banks and upon
such state banks as may come in, in the
nature of enforced insurance to raise
guaranty fund to pay the depositors OK
any bank which fails
And then he questions the right OF tho
government to enact such a law, say
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 dimming the
meaning and purpose Of the promises OF
thu" platform. If they come I'm under
such II system, they must necessarily
be brought within the closest national
control. and so they must really ceas" to
be- state banks and become national
His solictt1le for tie state bank will
hardly impress tire country. Tor he is
quite Indifferent To states aud their re-
served rights when he deals with other
subjects When congress is in the con
troll Of those who want to lcgislate for
the whole people rather than for the few,
under which state banks can avail them
selves Of the advantages of a federal law
guaranteeing the deposits Of national
banks just it was easy in Oklahoma
to frame a law which perHitted national
banks to take advantage of the state
guaranty system 1t will also be easy
to enact 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
no L.. r1at not hriT 81
such CONSERVATION as it does If the Re
publican candidate favored law allow
ing national banks to take advantage of
state systems for the protection of de-
positors, but Mr.. Taft's 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 imprudenoe of others. No
one can foresee the burden which under
TINS 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
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 tae Spectator,
who would be delighted to enter the
banking business when it was certain
that he could enjoy any profit that would
accrue, while the risk would have to be
assumed by his honest and hard-working
fellow"
lie even pictures dire disaster and de-
clares that If the proposal were adopt
ed exactly as the Democratic platform
suggests, it would bring the whole bank
ing system of the country down in ruin
rs an afterthought he suggests that
voluntary system might be tolerated, but
as his objections to a compulsory sys-
TEN apply just as well to q voluntary Sys-
tenn we may fairly count him against
all legislation which has for it's object
the guaranty of depositors.
The chief cause of 1ank failures Is the
making of excessive loans to directors or
officials of the bank. This is the fruitful
sible to secure legislation protecting
banks from their own officials and di-
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-:
actment of a law making it a criminal
offense for bank official to loan more
than the prescribed amount to one in
divdual. AT present we have a law pro-
tenth of the capital and surplus to ono
person or corporation, but the law is
only directory. OF course the comptrol-
Ter can suspend a bank if it violates the
law, but the law is not enforced, be-
cause the enforcement of such a law
would throw the punishment upon inno-
cent stockholders and upon the commu-
nifty, since the suspension of bank in
ficts a great loss upon stockholders and
diSturbS the business of the city or town
in which the bank is located.
The law should make it a criminal of
Tense to loan more than the prescribed
amount to one person and we would
probably be able to secure the passage of
a law prohibiting market peculation by
bank officials.
The oklahoma plan is better. A bank
recently failed in Oklahoma; within As
minutes after the notice of suspension,
the officer in charge had authority to pay
all depostors, and then the banking
Of
the bank and to prosecute the officials
criminallN. When the business was
closed up, the stockholders passed a reso-
luton thanking the state board for its
prompt action, the action of the board
being a protection to the stockholders,
as Well as TO the depositors and to the
An object is sometimes made to the
guaranty law that a new bank would
start up across the street" and, being
able to promise its depoSitorS absolute
security through the guaranty law, could
draw the deposits away from conserva-
lively managed banks, by Offering high
er rate of interest than the latter could
pay. RMS objection IS urged as II II
We're an unansWerahle one. But let us
see how easily il can be met Since the
law makes all of the banks liable for the
obligations of each bank. the law should
prohibit any abuse of this security by
any bank, and in oklahoma the banking
board has already fixed the rate of inter-
est that can be paid to depositors. Ac-
cordinG to the rules of the banking board,
no bank is permitted to pay more than
three per cent. on short time deposits
or more than four per cent. on time de-
posts running for six months or me re.
Why has the Republican party been
so quick to respond to the demands of
Wall street and so slow to yield to the
demands of the masses? There are two
reasons: First the Republican party has
allowed itself to become the servant of
the faVor-sceking corporations, and, Sec
Ond, too many Republican leaders look
at questions from the aristocratic stand