The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1910-12-03
Discusses Kansas Guaranty Law
in One This Week.
CITES ABILENE CASE.
Declares Working of Legislation
Proved Satisfactory.
Sees No Danger of Particularly
Strained Credit Condition.

! personal letters TO the state bankers OF
/ Kansas every once in awhile. In these
letters he discusses for the bankers the
present financial issues of interest. He
sent out two different letters to the
500 state bankers this week.
In the first one he discusses the Kan
sas guaranty law as now in full force
and effect again after being held up
for some months under the Judge Pol
| lock Injunction. He cites the case of
the Abilene bank failure under the new
law and its protection and success I'M
der strenuous conditions. He also dis
cuSsea the probabilities of amendment
to the guaranty law in the next legisla-
ture. In his letter he says in part:
| Abilene Bank Failure Case.
Il am receiving many inquiries regard
ing the present status of the bank
guaranty law. / am pleased to say
that the law is now in full operation.
This law has had more or less of a
stormy passage since its enactment by
the legislature. It has been shifted
| from one court to another and now
stands as having been approved as to
| its constitutionality and soundness by
the federal circuit court of appeals
! 1.-THE only test the guaranty law has
| had while in action was when the bank
at Abilene failed since the defalcation
| Of Cashier Flack. When this defalca-
| ton was first discovered the bank had
500 depositors with more than $160, 900
deposits. An invoice of it's assets, after
the banks directors had pledged to pay
$4,000, and the double liability was paid,
showed that this institution was sol
vent. The bank continued open, pay
ing its depositors a limited amount
each day until the depositors were re-
duced to 100. The department then
thought it advisable to appoint a re-
ceiver to finish closing up the affairs
| of the institution, and we will issue GER
| tificates on the guaranty fund for the
| remaining deposits.
will not be cashed by the fund until
all of the assets of the bank are ex-
hauSted. I am inclined to believe that
the guaranty fund will not be called
upon to pay any money at the finish
The remaining assets I believe, will
| pay the depositors in full, as we have
been and will be in position to realize
every dollar possible, on account of the
banks depositors being fully satisfied
| to wait.
1.-THE workings of this law were very
satisfactory. No run was made upon
the bank, and no demand for pay
ment was made upon the bank except
ing in the ordinary course of busi-
ness. All depoSitorS were satisfied
that they would be paid in full and
| did everything they could to help the
| embarrassing conditions Any banker
who might go to Abilene end talk with
any of the five hundred depositors of
| that bank will readily be convinced
that the guaranty law is as good a
| law for the banker as it is for the de-
positOr
give hundred satisfied bank depos-
! itors receiving one hundred cents on
the dollar under this law is a paying
advertisement to the banking world
that will return to the stockholders of
the banks in dividends many times
what it costs them in premiums or as
sessments. should the guaranty fund
| be called up to pay a few thousand
| dollars after all the assets are ex-
hausted. The stakeholder, after pay
| ing his double liability, can look his
neighbor in the face who was de-
positor in the bank of which he was a
| we protected you by guaranteeing
your deposits and saw to it that you
received every dollar you deposited in
our bank So, I repeat that this law
stockholder, good for the managing Of
ficers of the bank, and tower of
strength in the banking world.
| There is more or less dissatisfac-
| ton regarding the rate of interest al
| lowed under this law. Many bankers
cent should be stricken from the law
and the amount raised to four or left
with the bank to pay any rate of in
! terest that 1t may see fit. The legis-
! laIuT6 Will convene SOOfl WOulQ llk6
/ to have your bank write me officially
! it's opinion as to what should be done
with this question. I would also like
to have you write me Of any other
changes or additions you think should
be made to the guaranty law, or to the
general banking law, during the COM
| ing session, SO that this department
will be in position to use its influence
for the best interests Of the large ma
jority of the state bankers of this
state"
Financial Conditions Generally.
In a second letter to the bankers,
! Mr.. Dolley discusses the present money
market, the financial outlook and the
| prospects for the new year from a
! financial and credit viewpoint. He is
the demand for loans is strong at pres
emit, sees no particular danger of an
! overstrained credit situation. He re-
/ fers to conditions in Kansas City and
Kansas in particular. In part he says:
| Financial experts are anticipating a
strong demand for money during the
/ entire year of 1911. They are basing
! their view upon the average activity of
| trade throughout the world. There is,
| however, at this time no serious indica-
| tions of a disastrous strain to credits.
"The great banks of the world have
/ been moving cautiously since the 1907
/ shakeup. Capital is more or less timid,
I and has been for some time past. The
i strong demand for money continues.
i The last call statement of the New
4 York national banks shows an excess
| of loans over deposits. The Bank of
| England is still maintaining the high
I rate of discount of 5 per cent.
4 1.-The statement made by the national
Il banks of Kansas City in response to
the recent call, showing the deposits
to be $3,500.000 smaller and yet the
cash resources 100000 larger than
lone year ago, affords positive evidence
of the strengthening process that has
been going on, and the increase of
s4OOO,O0O in deposits during the past
four months compared with a loss OF
that sum in the corresponding period
of 1909 is very interesting feature of
these returns.
What has been in progress at Kan
sas City has been the rule all through
the country districts and the big house.