Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1909-04-02
A LIVE QUESTION IN THE WEST

The guarantee of bank deposits. says a
news item in a recent issue Of the Wash
ineton Star. is becoming such live ques-
ton in the middle west that the State
banks which are able to guarantee depos-
its are said to be able to put out OF bust
ness the national banks which cannot do
so. This has been the case in Oklahoma
and it is now live question in Kansas
Nebraska, Iowa. Texas and Colorado.
The matter is one that caused the pres
ence of Governor W. r. Stubbs, Of Kansas
and several other leading citizens of the
State in Washington a few days ago to
discuss with President Taft, the Attorney
General and other federal officials whether
il is possible to frame State law that
will permit the national banks to partici-
nate in the benefits of the deposit guar
antee
In speaking Of the matter Gov. Stubs
said that the effect of the deposit euaran-
tee feature in Oklahoma had been to draw
business away from the national banks.
The Department of Justice decided that
the national banks could not participate in
the guarantee feature. owing to the way
in which the State law was drawn. Kan
sas, however, had tried TO avoid any fea-
ture that would keep the national banks
out, and the party was here principally to
discuss the matter with the federal officials
and see whether the Kansas law would
stand the test.
The banks under the Kansas law viii be
partners in a sort Of mutual insurance
company. They will have to put up a
million dollars in State and national secu-
rites to guarantee the payment Of depos-
its, and the dues or insurance premiums
win be only one-twentieth Of per cent.
annually.
1t was found on going over the records
of failures that the losses from this cause
did not amount to more than one twenty
fifth of one per cent. so it was thought
that the premium of one-twentieth would
establish an ample guarantee fund. There
is also a provision in the law against the
assessment ever being more than one
quarter of one per cent Of the deposits.
The customers of the banks, in urging
the guarantee feature. say that the gov
eminent. when it deposits money. insists
on having its deposits protected by guar
antee .and. The State does the same and
even the county and the school districts
follow suit. The individual depositors say
that there is no reason why they should
be left out. II one bank in community
cannot give the guarantee. then they will
do business with another. and so keen has
the competition in Oklahoma become that
many of the national banks are donation
alizing themselves so as to take advan-
taee Of the guarantee feature Of the State
law.
This subject aroused great deal Of in
terest as an issue in the late presidential
campaign, and the supporters of the Dem
ocratic platform presented the strongest
kind Of arguments in favor Of the guaran-
tee Of bank deposits by the federal govern
ment. The Republican platform declared
for postal savings banks as counter issue
to the Democratic policy Of government
guarantee. There now appears to be but
little interest in the subject Of establishing
postal savings banks, while the demand
for the guarantee of deposits is shown by
the foregoing statement of facts to be
stronger than ever before and destined to
become the prevailing system Of the flu
ture, at least in the western section of the
country