The copper era., 1909-11-04
The Bank Deposit Guarantee Measures.

me bdnk Dep0Sit Guardntee Measures.
 When Arizona becomes a state, as it undoubtedly will in the near future, we shall hear much of a proposed law toguarantee the deposits in banks along with numerous other proposed laws. IL is worth while, therefore, to keep in touch with the developments in this line elsewhere.
 Until the supreme court of the United States shall pass upon the question, it remains to be determined whether any guaranty law based upon the compulsory assessment of banks can be made valid. A federal court has declared that the Nebraska bank guaranty law is unconstitutional, and as the Nebraska law was modelled after that of Oklahoma, many law yers expect that the Oklahoma law will be knocked out. Its validity has been upheld by the supreme court of Oklahoma, but appeal was made to the supreme court of the United States, where the case is pending. In is decision in the Nebraska case, the federal court held that "the foI cing of contributions from all banks is an unlawful act and in violation of the due process clause of the constitu- tion." This feature of the Oklahoma law is the one which has been most commended, and with this require ment eliminated the bank guaranty law of that state would not amount to much. In view of the probability that the supreme court will hold the act unconstitutional, it has been sug- gested that the governor of Okla homa would call an extra session of the legislature to amend the law so as to leave it voluntary with the state banks as to whether or not they would place their institutions under the guaranty provisions. On this point, one of the leading bankers of Oklahoma is quoted as saying:
 ''If the Oklahoma guarantee law is knocked out by the courts it is doomed for the simple reason that the law has lost much of it's popularity by reason of events in connection with the failure of the Columbia Bank and Trust company at Oklahoma City, and also because the state bankers, while compelled to swallow their medicine now without public protest, would fight the adoption of new guarantee law if the proposi- tion were ever again to come before legislature. When state bank is compelled to pay into the~ guarantee fund from 50 per cent to 90. per cent of its earnings for an entire year in order to pay the depositors in an in- stitution that failed because it was not conducted along conservative lines, that bank, of course, will pay because it is compelled to, but it is not likely to be enthusiastic in SUD- port of the guarantee system.
 "Most of the state banks of Okla doma have large deposits of state money which the banking depart nent may remove at pleasure, and they will not, of course, openly op- pose the guarantee law as long as it
 $ in force, through fear this money will be removed from their banks. The people of the state, too have begun to realize that the very basis of business is the bility and integrity # the men engaged in it and that any guarantee system applied to banking merely encourage loose busi- ness methods"
 Fortunately for this territory, all the good and bad features of laws guaranteeing bank deposits by states will have been developed before Ari- lOna is admitted, and our people will be in position to decide intelligently Arizona Republican.