Arizona republican., 1909-10-26
The Bank Guaranty sehem.

When Arizona becomes a state. as it undoubtedly will in the near future. We shall hear much of proposed law to guarantee the deposits in banks-along with numerous other proposed laws. It 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 af- ter that of Oklahoma, many lawyers expect that the Oklahoma law will be knocked out. Its validity has been upheld by the supreme court of Ok lahoma, but appeal was made to the supreme court of the United States, where the case is pending. In its decision in the Nebraska case. the federal court held that the forcing 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- gesled that the governor of Oklaho- ma would call an extra session of the legislature to amend the law so as to leave 1t 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 doom ed 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 Oklaho- ma City, and also because the state bankers. while compelled to swallow their medicine now without public protest. would fight the adoption of a new guarantee law if the propO- sition were ever again to come before 6 legislature. When a 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 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 sup port of the guarantee system.
 Most of the state banks of Oklaho- ma have large deposits of state money which the banking department may remove at pleasure. and they will not, of course, openly oppose the guarantee law as long as it is 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 ability and integrity of the men engaged in it and that any guarantee system ap piled to banking merely encourages loose business methods"
 Fortunately for this territory, all the good and bad features of laws guar anteeing bank deposits by states will have been developed before Arizona is admitted, and our people will be in a position to decide intelligently.