The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1909-05-26

friends, and on the other hand vic
iously assaulted by it's enemies.
Helped Make the Law.
81 took a deep personal interest in
all of the proceedings of this bill and
probably watched it as closely and
lature. Scores of the best bankers of
Kansas, men in whose ability you and
1 have every confidence at all times,
came to me earnestly supporting the
bill, and said with all candor that it
was the proper thing for our legisla-
ture to enact the law. Many other
bankers came to the speakers office
and tried to impress upon me that the
friends of the guaranty law were not
in business sense sane, were more
or less irresponsible, and that we
should be at home husking corn and
not members of the Kansas legisla-
ture; and in my case especially, as it's
speaker.
Voluntary Cooperation Foundation.
I'VE have utilized several time
tried and well-proven points of finance
and of common sense. Among these
1 wish to mention, first, the principles
of voluntary cooperation and mutual
ity-the principle of the old adage
that in union there is strength and
that in cooperation there is relief
from the determination that is melted
out to the temporarily weak in times
of great turmoil and disaster No
banking system of the banking world
has ever been successful that did not
recognize the principles of coopera-
ton. I mention also the principle of
insurance, the practice of laying
something by in prosperous times to
guard against casualty and the con-
tingencieS of the future. To these add
the principle of strict state examina-
ton and supervision of all things con-
nected with the banking business and
you will have what has been written
and studied with great care-the
new Kansas bank depositors' guaran-
ty law.
Comparison With Other Laws.
Its comparison with other guaranty
laws will show that the weak places in
other laws have been carefully avoided
and that our law is founded upon sound
business principles. Guaranty laws
be divided into two classes: One upon
the principles of taxation wherein the
application of the law is compulsory
and mandatory, and the other upon the
the application of the law to any bank
is voluntary and entered into from
sense of benefits to accrue to it.
Examples of each are found, the
first in Oklahoma and the second in
the Kansas law, both enacted within
the last two years. The objection to
the Oklahoma statute is that it is prac-
tically an unlimited tax law. 1t pledges
the entire assets of every bank to guar
antee every other bank in the state.
1t encourages speculation, the starting
of unnecessary banks by spectators
and irresponsible people, the payment
of unsafe and ruinouS rates of interest
to secure deposits; and I believe for
these reasons their guaranty fund will
prove to be insufficient and improperly
guarded, and their system will bring
disaster.
Strong Points of Kansas Law.
1.-The Kansas bank depositors' guar
anty law has carefully obviated all
these objections. Kansas banks, under
our plan, cannot pay more than per
cent interest on time deposits, and
banks which have not been engaged in
business for more than one year can
not participate. Banks whose deposits
exceed ten times their capital and sur
proposed to relieve a bank from re-
sponsibility. This question is raised:
Will the fund be sufficient? Statistics
show that on the principle of guaranty
assessments a fund of $500.000, main
tanned as is planned, will make pay
ment to every depositor of every bank
that will fail in Kansas. Those who
have assailed the theories of bank guar
anty laws-basing their arguments upon
the operation of laws of the past-haVe
principle or relation of banking; that
is, the close similarity in nature of
bank credits whether created by bank
note issues or deposits.
Was Tried One Hundred Years Ago.
1.-THE guaranty Of bank deposits is not
a new departure in the banking world.
we md that IN England, a hundred
years ago, bank deposits were guaran-
teed, and have been in various ways
during the past century. All of the
guaranty laws of the past, no differ
ence how broad their terms, have had
or hot VNri17o oh
of bank notes, and a close study of
the history of these will show that
where they have failed they did so be-
cause they did not recognize the true
principles OF the identity in character
of these two classes of bank credits, |
namely: bank deposits and bank notes. |
The currency commission, ting
the American Bankers association, re-
Gently stated this principle so clearly
that it was at once approved by the |
committee on banking and currency, |
in congress, and 1 call your attention
to that fact. "A bank note is essen |
TALLY the same as a deposit, payable |
on demand. 1t is a bank deposit con- |
verified into such a form that it passes
current 1t resembles deposit credits |
so closely that the Bank of England, |
the greatest and most successful finan- |
cial institution the world has ever
known, was built upon the issue of |
bank notes. For 200 years that bank |
had exclusive right to issue notes, and |
that carried with it the exclusive right |
to receive deposits. In the United |
States we have no bank of issue and |
we can have no perfect guaranty of |
deposit credits until this. defect in our
system is supplied and the |
nation given a currency sufficient to |
meet the demands Of its great COM
merce. Then, and then only, we will |
have a system recognizing the princi-
Piles of mutually of banks and one
which, will guarantee notes and other /
credits upon the same basis.
Definition of the Guaranty Law.
THE Kansas guaranty law adopted
the principle of mutually between
banks. 1t is a step in the right direc-