Little Falls herald. [volume] (Little Falls, Morrison County, Minn.) 1889-1950, 1909-04-23
PREAD OF BANK DEPOSIT
GUARANTY.

Springfield Republican: At least
three states are now following
Oklahoma in applying some form OF
mutual guaranty OF bank deposits.
These are Kansas, Nebraska and
South Dakota. Nebraska more closely
follows the Oklahoma model than the
other two states mentioned which
substitute q voluntary insurance
arrangement for the compulsory plan oi
Oklahoma. In South Dakota. for ex.
ample, the new law provides. for q
state association of incorporated banks
under the direction of board con
sisting of the state auditor, the state
treasurer and the public bank OK.
aminer. This association will not
form unless at least 100 banks with
an aggregate capital of at least 81,
0O0, 600 volunteer to enter. But if only
q few banks should wish to form such
an association. the others in competi-
ton could not we'll afford to stay out.
and thus there is every promise that
the scheme will 60 into effect and be-
come inclusive Of PRACTICALLY ali the
state banks. A voluntary deposit in
surance association, once started under
state supervision, cannot differ much
IN effect from state enforced assocla'
ton tor the guaranty of deposits. In
other words, deposit guaranty IS to
have, practical trial on considerable
scale among the western states; and ii
it works well there, or If q popular
belief obtains that 1t can be made to
work we'll, the banks of other nearby
states will be driven to the adoption
of some plan of mutual guaranty OF
insurance of deposits.
The position IF the national banks
in these deposlt-insurance states ap.
pears to be decidedly uncertain. The
effect of the Oklahoma legislation has
been to cause many of the national
banks to surrender their charters and
change over to the state system. No
less effective In turning national into
state banks will probably DO the
voluntary deposit insurance system of
Kansas and South Dakota. The people.
AS rule, prefer to deposit with
guaranteeing or insuring banks, and
national banks without this feature
are finding it uphill work to complete.
Attorney. General Bonaparte ruled that
national banks could not lawfully go
into the Oklahoma system of state.
enforced guaranty OF deposits, and
Attorney. General Wlckersham now
rules that they cannot, without change
of the national law, enter the
voluntary insurance system of Kansas.
Officials of the latter state, speaking
as much on behalf of its national
banks as for the general banking
interests of the commonwealth, have
been aguing the case at length before
the federal department of justice, and
have been turned down. If. then, con-
gress takes no action, we are likely to
see as great lessenlng of the number
of national banks IN the states of
Kansas, Nebraska and South Dakota,
as has taken and is still taking place
in Oklahoma.
This state deposit guaranty move.
ment thus threatens greater dis.
turbance to the national banking
system IN the West than the case OF
the trust companies has caused in the
East. Altogether that system IS find.
ing itself severely crowded Nor is
this a fact to be lamented. It will
make the necessary task OF national
bank reconstruction and currency re-
form all the easier.