Omaha daily bee., 1908-11-02

and that u was time to apply the brakes
In order to avoid q disastrous runaway
and. as one Of the local characters down
here puts II: It's going some when an
Oklahoma democrat gets scared about
having too much Of a good thing In the
way Of guaranteeing banks
Mention OF this stand taken by the state
authorities on becoming alarmed over the
situation suggests another phase OF the
matter which was, perhaps. briefly mem
toned In a former Dispatch refer to the
ruling of Judge Houston OF the district
court Of Logan county, who, when the
parties who had been denied a charter.
brought a mandamus proceeding. decided
that the state banking authorities were
powerless 70 exercise their discretion in de-
nying banking charters to those who made
application and we're able TO show that
they had fully complied with the law.
In other words. this illuminating incident
not only demonstrates that the friends OF
the law and those delegated with authority
for carrying out its provisions are alarmed
at the furore for starting banks which is
sweeping the state like a prairie fire. but
that they are also powerless to curb or
check this tendency. and that applicants
VI NhdINeIS dl look hike 10 Nne eye
OF the law. just as all banks operating
under that law look alike" to depositors.
still another incident suggests that the
banking authorities feel the situation needs
a restraining hand. And by the same token
II as clearly demonstrates the fact that the
authorities are without the power to control
the situation or even to moderate Il in any
degree.
Double Interest O1ered,
The saiisaw Bank and Trust company Of
salisaw, okl.. openly advertised Il would
pay a rate Of interest on deposits nearly or
quite double the limit designated by the
bank commissioner The result was that the
management Of this institution was
promptly called over the carpet by that
officer.
Immediately after receiving this repri-
mand the management OF the bank openly
advertised that while the bank had been
Informed II could not, under the rules and
regulations Of the banking board, pay a
higher rate OF interest on deposits than 4
per cent. the president Of the bank would
himself, personally. pay an additional pre-
MUM or discount which would give to the
depositor as high a rate of interest as that
designated in the previous advertisement of
the bank.
While 1 do not assume TO give the precise
wording OF the Advertisement referred TO,
1t was in substance and in purpose as I
have just stated. Banks operating under the
guaranty law make no bones about paying
their depositors a much higher rate Of in
terest than 4 per cent, thus showing that
the banking authorities are powerless to
prevent violations of the restrictions holding
the rate of interest to be offered down to 1
per cent.
How much a bank will pay for deposits
here in Oklahoma is merely a question Of
how keenly the banker desires the money
which in most cases where an abnormal
rate OF interest is paid means how much
he hopes to realize from the use of the
depositors' money in speculative investment,
which promise, to his mind, a fantastic
margin Of profit.
C. D.. E. Roberts, president Of the First
National bank Of Ponsa, City okl., says
"Ralston and Fairfax are two neighbour
ing towns. When the so-called bank
guaranty law went into effect each of
these towns had two national banks.
Ralston has a population of only 5TS,
while Fairfax, about eight miles distant,
has only 47O. There is now one new state
bank In each town and one more for each
town Is organized and fighting to set in.
Four Banks IN Small Town.
"And under the recent ruling of Judge
Houston they will get their certificates
to operate In these towns, making four
banks In each town. In each of these
two towns the national banks have Q
capital of S25, 900 each and quite a good
surplus. Think of four banks attempting
to live and prosper in a town of SIS pop
ulation-to say nothing of four banks at
- - r An1.
470 men, women and children!
eth state banks have $4,000 each, and
under Organism in Oklahoma the state
bank with its little capital and it's reck'
less bankers is just as good In the eyes
of depositors and In the business 1t car
get as the solid national bank, because Il
is doing business on the standing anC
the solvency of the good banks having
substantial capital and surplus and a 5000
reputation built up by years of careful
and conservative banking.
Organism says to the people: 'Yol
may deposit your money in my banks AM
IL one OF them fails I will walk over t
the good banks and put my hands int
; their cash drawers and without their con
sent take out enough to pay you--so d.
: your business with the banks that conn
, under the operation of Organism in Ok
lahoma."
The recent closing of the Internationa
bank of Colgate, okl., which had alread!
been commented upon in the public dis
patches, is a matter of present interes
from the fact that its president IS nov
proclaiming that his institution wa
: slaughtered for exhibition purposes an,
that the bank commissioners act was un
. justified on any grounds excepting thos
: OF political expediency.
However right or wrong may be thi
, contention, two pertinent facts stand on
= clearly. The bank went under and II
depositors suffered the usual and norma
spasm OF anxiety; second, the grand jur
of that county has returned an indietmen
aSainsf the hank commissioners.