The National tribune., 1909-08-05
GUARANTEEfNG BANK DEPOSITS.

4
] After the most careful consideration
that could be given it by bankers busi-
ness men and legislators Texas has
passed a. law guaranteeing deposits IN
the State banks. This will go into oper-
alton in'n1s10,s, and not be amendable
for two years Since the law has been
put upon the statute books the bankers
and others are. studying it carefully as
to the likelihood of how it will work
out practically. AS rule, all these
students are strongly in favor OF the
principle of the law, and their criti-
cisms are mainly as to the details in
| its practical working. These criticisms
show that while it is easy to put a plank
favoring such guaranteeing in plat
form, it is a far more serious work to
frame a satisfactory law.
The first criticism is that stock
holder in bank, who may also have
deposits in the bank, and certainly
should have, will, on account of his
being a stockholder, not be allowed to
get his deposit until all the others are
paid, and it is feared that this will
prevent business men from making de-
posits in the banks in which they have
stocks. for fear that their money may
be tied up.
The next question is as to when and
how the depositors shall get their
money. The law says that the depos-
itors shall be paid in full out of the cash
of said bank, as far as this will go,
and the remainder to be made up from
the guarantee fund. There is no spe-
cific time mentioned when this payment
shall be made, and it is foreseen that
there may be injunctions and other
legal delays to tie up the money in
definitely. 1t will be possible for inter-
ested parties to get an order from
Judge taking the bank away from the
Commissioner and returning it to its
officials.
The question of available cash. is
highly important. If the bank had
available cash it would not fail. And
while there might be plenty of cash in
the guarantee fund during good times,
it would speedily be dissipated if there
were number of failures.
The law provides that IS per cent of
the guarantee fund shall be kept in the
State banks. consequently each bank
that fails will have a part of the fund
in its possession, and that part will be
tied up during the proceedings. If there
is panic, and number of banks fail,
all of its fund will be tied up.
Still another objection is raised that
interest-bearinss deposits are not guar
anteed Oh. protected by the law. This
it is feared, win work very badly both
for the 8ankst and for the depositors.
preventing the banks from receiving
time DEPOSITS. upon which they make
most of their money.
Still af6thers8bjection is raised to the
provision which allows banks to be
started with "a capital of $4,000 and
upward. is Thisowill inevitably lead to
the starting ofnian immense number of
banks, which win decrease the deposits
in;the main ones and increase the pos
sibilties of faflares and loss. - -i'a1
Under the law depositor must make
proof Of his deposits within As days of
the closing of the bank, and unless he
brings suit within six months his claim
is barred. While all the criticisms are
friendly and the critics say that they
favor the principle of the law, yet it
will be seen that the law as enacted is
very far from satisfactory. A great
many unexpected objections have been
raised, with possibilities of the law
working much hardship.