Abilene weekly reflector. [volume] (Abilene, Kan.) 1888-1935, 1909-08-19

dollars. Bank Commissioner pOlley
has issued certificates to iorty-fiye
banks. }s tass ".
The present situation ca best be
Illustrated by a concrete example.
| Among the forty-five banks is the
Bank Of Topeka, one Of the Oldest
and strongest in the state. The state
hank commissioner of Kansas, as re-
ouired by law, has issued q certiii-
cate to the Bank Of Topeka which
a II follows the law. and we suppose
Il does, icertifies that the depositors
Of the Bank OF Topeka are now
guaranteed by thte bank depositor's
Guaranty fund Of the state, Of Kan
sas." The Bank OF Topeka has az
posts amounting to s2,2oo,OoO. II
| Il were to fail tomorrow there would
be precisely sS.b46.s4 in the guar
anty fund to back up, the certificate
of the bank commissioner Beyeno
this there would be nothing except
what may be called the good faith
fund. The other forty-four banks
have not obligated themselves aDso-
lutely to pay any further assess
ments. They have put themselves
IN a position, however where they
! must either pay assessments along
from time to time or they must for
feit what they have put into the good
faith fund. The good faith fund at
this time consists Of bonds, or cash
in lieu of bonds, amounting In the
aggregate Of $4,000. OF this good
faith fund the Bank Of Topeka has
taken out Of its own assets $4,000
or $4,000. So that If the Bank OF
Topeka were to fail tomorrow the
probable result would be as follows;
The other banks in the. combine
would elect to forfeit their interest
in the good faith fund and discon-
tinue all connection with the matter
This they could do without dishonor'
They have nowhere promised to re-
spond to assessments. They have
the legal and the moral option either
tn respond to assessments or to for
felt their deposit In the good taltn
fund. So that the utmost that there
lis to back up Mr.. Dolley's certificate
that the depositors in the Bank oil
lToueka are guaranteed, is, primarily
the guaranty fund Of $4,000, and
lsecondarily, the good faith fund Of
| sa1 900: or a total of about $S4,5OO
to protect deposits Of $2,2OO,OOO:
And when would this fund DC
available? The law provides that II
lis available after the affairs OF the
u hank have been all wound up and
the double liability Of stockholderi
exhausted. Four years ago 9. Y
lDevlin Of Topeka became bankrupt
His general creditors have not vel
received penny Of dividends mol
have they even received an ofncial
report upon which they can base an
estimate of what they are finally 70
receive. 1t takes long time to com
/ plete the administration of the al
4 fairs of a defunct bank; and Q Still
Longer time to exhaust the legal
remedies against the stockholders
So that il the Bank Of Topeka were
| to fall tomorrow the chances ars
That it would be five or six years oe-
fore the deposltofs would receive 2
lcent from the state guaranty. ana ana
then the total that they would re-
ceive from that source would De
Ss4,50O.
i 1t IL Of course true that sS4,evO
would be better than nothing u
the Total loss were $l,OO0.O00 sS4i-
600 would be more lAan 3 per cent
"a each depositor and this is doubt
LESS money that they would not have
received but for the guaranty deposit
law. But 1t is obvious that that law
Il extremely defective which requires
1 state bank commissioner to issue
lsuch a certificate "a certificate which
4 is almost fraudulent in its char
! acter. We think Commissioner
lDolley would be warranted On
grounds Of plain morality in max;
ling his certificate read as follows;
oThe depositors Of the Bank Of 10
peka are now guaranteed by the
hank depositors' guaranty fund o.
the state Of Kansas-which at GATE
amounts to ss.546-and which VIII
increase only as the liabilities against
LII increases" The Bank of Topeka
is all right; il isn't going to fall
But really, doesn't puny guaranty
like this weaken IT rather thar
strengthen 1t? And isn't it an out
rage under circumstances like thii
to require a bank commissioner te
stvn mn such certificate?