Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1909-10-06
OkIahoma's Law Vindicated.

The charge that the guaranty of
bank deposits law of Oklahoma would
fail of the ends it was designed to
serve has been completely refuted
The law has been tried and the ex-
perienCeS vindicate the farSighted
wisdom of the men who drafted it and
the Legislature which adopted it.
| The Columbia Bank & Trust COM
pany of Oklahoma City was declared
insolvent by the state banking board
shortly after midnight on the 10Th of
September. On the morning follow
| ing the banks doors were opened as
| usual, with officers of the state in
charge, and announcement of the in
solvency publicly made Depositors
demanding their money were paid in
full without a moments delay. Not
one of them lost penny Not one of
them could lose a penny because. be-
sides the assets of the bank in cash
there was the immense guaranty fund
of the state to draw upon.
The Columbia had deposits of So
100000 How much of this amount
was drawn out has not been stated.
than in ordinary circumstances would
be asked for because national bankers,
who are hostile to the guaranty plan,
circulated rumors that if depositors
did not set their money Immediately
they would not get any money later.
Governor Haskell has already an
nounced that he will give the rod of
attention to these libeling bankers
when the grand juries next convene.
The Columbia was bank of reserve.
and had $1.SOO.OO0 of the money of
smaller state banks in it's vaults. But
these banks will feel no embarrass-
ment because there is money enough
to supply their needs. and if there
should not be enough, it is within the
province of the state board to levy an
emergency assessment upon all banks,
and thus secure enough, and more.
The hank was closed by the state
board because it had notes of oil oper
atOrS totaling large amount If this
paper was good, the bank was solvent;
if not good. the bank would not be able
to meet it's obligations. The board
concluded that much of the paper was
ilOl 35OOt, anu 81 CIOStu TIE DdIlk.
Now. the point is that if the state
board had not closed the bank, the
latter would have continued the pol
icy of loaning on this dubious secur-
ity. 1t would have done so under the
old system. and one day. in all prob
ability. there would have been fail
IRE terrific in its consequences. And
because the bank would be holding
approximately $1.3OO,OO0 of the funds
of other banks, these other banks, un-
able to get their money, would be com
PEELED to close their doors Oklahoma
would thus have the same experience
which was the whole countrys in
October. 1907. Then the reserve banks
of New York refused TO pay CORE
SpOndent banks the money due them
and the correspondent banks had to
refuse the depOsitors the money due
them. Both proceedings were illegal,
as illegal as proceedings could be. Ad-
herring to the law. every one of the
banks refusing to pay it's obligations
should have been declared insolvent.
But no bank was. because the condi-
ton was universal, and there would
nave lOllONch uHlNGl Sdl WIeCh.
But in Oklahoma the correspondent
banks had no such worry. And their |
depositOrs got what money they de |
and can have all if they de |
mand it.
The loss, if any there shall be, will |
come out of the guaranty fund. Chi |
cago clearing house banks of their |
own volition stood a loss of $4,000. 900 |
to pay the depositors in the failed |
Walsh banks in full in order to allay |
he fears of their own depositors and |
-hus protect themselves from run
and consequent loss. Whatever the
Oss to the guaranty fund in Oklahoma,
he guaranteed banks will have paid |
little for the very security that cost |
Chicago banks $6.000,000