The Manitowoc pilot. [volume] (Manitowoc, Wis.) 1859-1932, 1910-12-08
POSTAL BANK INIQUITIES.
BY JOHN SCHUETTE, PRES. OF
MANITOWOC SAVINGS BANK.


voc had been selected as the only city
in Wisconsin where postal bank woulo
be established to try out the plan, the
citizens were curious to know why
SOME REGARDED it as an honor
others as an insult because our banks
are as safe as the government; others
again thought it was done because
from Manitowoc went out the Original
argument and the strongest agitation
for insurance of bank deposits by which
it was shown how our people had SUI
fered from the many bank failures
here, and how great deal OF boarded
money would be brought out if it were
insured. All of this the government
authorities had been acquainted with
and perhaps their sympathies were a.
reused and turned to our relief
IF THE LAST TSUPPOSITIO is the
right one, then | must say that the
government has chosen wisely, because
there is no city in the country where
~
success than right here. And | may
further add that to the many who have
worried about their money it will
prove great relief and | hope that
this little trial of insuring depositors
by the government will force the
bankers to follow its lead.
rrIJI TnCrrNT IANL- JANN r,rp-
vides that any bank, national or state,
doing business where postal bank is
located, may apply for and receive %
per cent of such funds; the balance OF
35 per cent will go to the United States
treasury Further, that no bank snail
receive more than the amount of its
capital and half of its surplus, and that
the bank shall pay to the government
not less than q per cent interest 1t
is further provided that for every dol
lar received by the bank from the gov
ernment it must give to the govern
ment ample and gilt-edged security.
THE MANITOWOC SAVINGS
bank has not, and | believe, will not
apply for such funds, for the reason
that have always maintained that it
would be unfair to the bank to secure
one class of depositors to the detriment
of another class. This is best known
to bankers as many bank has sustain
ed heavy losses because of preferred
creditors who took the cream of the as
sets. and as a result the residue was OF
but little value. Owing to this inJust-
ice many states have passed laws pro-
hibiting preferences.
r1' PRESENT ALL THE DEPOS-
IT'S in a bank are in one and the same
class. But after the bank receives
government deposits, which must be
secured by the bans best assets, then
the government becomes preferred
depositor, forces itself into the first
class and crowds the other depositors
into the second class.
DON'T IT SEEM ARBITRARY and
unjust for rich government, which
has full control over the banks, which
has the authority to examine bank
from top to bottom as often as it pleas
es, and which does so examine, there
by being enabled to- determine the sol
vency of each bank, which other de-
positors cannot do, and then demand
special security for its deposits in pre-
ference to all other depositors without
requiring the banks to insure its other
depositors? This according to Roose-
welt, is not square deal.
THIS POINT ALONE, | believe,
will make the postal bank act uncon-
stitutional, if tested in the courts. But
right here | am reminded that when
the Oklahoma national banks wanted
to insure their depostors under the
state law, which allowed them to do
50, the L. S. Encouragement interfer-
ed and stopped it by claiming that it
was a violation of the constitution.
What farce. The idea that banks
cannot mutually insure their assets to
the extent of their deposits, which is
really deposit insurance.
UNDER THAT DECISION it would
be unconstitutional for bank to in
sure itself against loss by fire, by burg
larry, by defalcation, all of which is
safeguarding, in measure, the deposi-
TOR. If I had carte-blanche of speech,
such as Roosevelt has, | might say our
Encouragement is a ''jackass and a
crook" but / will be more diplomatic
and say that the Encouragement must
have been under a spell of evil intiu-
ence. Let me emphasize on preferred
depostors.
ALL BANKS WHICH hold govern
ment deposits have two classes of de-
positors of which the government is
always the first, the one fully and spec
tally secured, while the other deposit
ors are the second class and not spec
tally secured. This is unfair to the
other depositors because, if there are
no preferred depositors, in any event
all will share alike in all the assets
If however, the government is secured
and preferred, it will always get its
deposits paid first and in full, while
the other unsecured depositors will
have to wait and take what NAV be
left, if anything.
THE GOVERNMFN PREFER.