Wausau pilot. [volume] (Wausau, Wis.) 1896-1940, 1909-10-19
Against the Guaranteeing of BanL
Deposits.

The PILOT has favored the idea of
guaranteeing bank deposits, and does
yet, and no doubt will continue to do
SO until fair trial demonstrates that
IL is Impractical and harmful to the
best interests of our country. Not
Wlthstanding this, the PILOr has no
objections to publishing articles
against the guaranteeing of bank de-
poslts as seen by prominent men of
our country, therefore, by request.
the following is given to our readers
My visit to Oklahama with the
legislative committee has more than
ever confirmed my own opinion that
deposit guaranty law is wrong in
principle, and could not but work out
badly in practice. The situation
which l found in Oklahoma and Ok
lahoma City only emphasizes the in
Justice OF endeavoring to make one
bank responsible for the dealings of
Its neighbors," said James K. Ilsley,
president of the Marshall and Ilsley
bank, of Milwaukee.
AS chairman of the legislative COM
mittee of the Wisconsin Bankers
association, Mr.. Ilsley accompanied
the Wisconsin special legislative COM
mittee named to investigate the guar
antee system, to Oklahoma. Their
arrival there was nicely timed to the
failure of the Columbia Bank and
Trust company, the largest in the
state, and an unusual chance for OBJ
Servation was given. Mr.. Ilsley does
not agree with Senator Owen, chair
man OF the special committee, that
the system is good, or with similar
views held by officials of the state of
Oklahoma. He says:
1T is manifest that the chief weak
ness of the law is the fact that it en-
ables incompetent and INSCRIPTIONS
men to enter the banking business
and to obtain deposits which they
would be entirely unable to secure if
they depended upon their own bust
ness standing in the community. In
other words it lowers the standing of
the banking business.
This, however, is my own view
solely and L am in no way authorized
TO speak for the legislative committee.
The members Of this committee have
maintained an impartial attitude and
obtained all of the information possible
TO secure on both sides of the question.
| do not believe that the committee
has had meeting to consider the
testimony, so it will be some time be-
fore anything official may be expected.
My own contention that the guar
anty law lowers the banking stand
ards was exemplified in a startling
manner by the closing of the doors OF
the Columbia Bank and Trust COM
pany. The management obtained
control by purchase, some eight or
nine months ago, at which time the
bank had deposits in the neighbor-
hood of $360,000. In six months time
by offering high rates of interest and
making all sorts of reckless promises,
1T had built up the deposits to 81, SOO,-
600. 1t also had the apparent backing
and help of the state administration
and was regarded as a pet in the
guaranty system.
"These deposits were put out with
free hand, large sums being loaned
on oil enterprises of w. T.. Norton,
president of the institution; other
large sums being advanced to real
| estate spectators. Conservative
bankers in the community soon be-
came aware of the unsafe methods
being pursued by their neighbor, and
feared that trouble would sooner or
later result. But no one dreamed
that within short time, and when
there was no sign of any general
financial disturbance, a crisis could
possibly come into the banks affairs.
However, on Monday, September
n, the Oklahoma City Clearing House
association learned that the Columbia
bank needed $3.50, 600 cash to continue
business. The associated banks de-
cided to make this loan provided the
bank could put up satisfactory collat-
eral. This condition could not or
would not be complied with and the
result was that the state banking de-
partment took possession of the bank
on the morning of Wednesday, Sep
TENDER 20, announcing that it would
at once proceed to pay off depositors
in full.
"This was done with a great flour
ish of trumpets, claiming that the
success of the guaranty law now
would be fully demonstrated and that
no one would offer the slightest incon-
venience. Within day or two it de
veloped that while small deposits and
those who presented their claims over
the counter were receiving payment,