The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1911-08-15
oKI.AHoMA's BANK MUDDLE.
When Oklahoma adopted the b

banks to guarantee the depositors of all
other banks in the State, number of
National banks gave mp their National
charters and operated under State laws.
This was because those banks were
afraid Of losing their business, since
the guaranty fad seemed likely to take
the depositors to the State banks, on
the idea that the guaranty was safety
for them above that which the Ma
tioual banks could provide
But the experience Of years has
shown that the bank guaranty is a
costly, impractical business. The as
sessments TO make good on reckless
bankers and banking institutions that
have failed, came 30 heavy and so fre-
quent, that n scramble has ensued on
the part of those National banks that
went into the State system to get out
of that system and reurn to their for
mer status as National banks, as well
as for number Of State banks to make
the same change.
The Bank Commissioner Of Oklahoma
| undertook to arrest this movement by
pointing to the requirements of the
State banking law, claiming that under
it the simple transference of an account
from State to National bank did not
meet the requirements Of the State
statute. This, he claimed, contemplates
the actual payment OF all the depositors
in full as A condition precedent to the
g11rT nIe nf bh Sfa} 81, arta
State official further gave notice to
the banks that were preparing to leave
the State system to resume business un-
der National charters, that he wonld
not permit State bank to be National
lied until it had actually paid every
one of the depositors in full, or pro
cured from all such depositors their
consent in writing to transfer their ac-
counts to the contemplated National
bank. He further notified banks that
contemplated such change that, if they
did not comply with this State law, he
would put their bank In the hands Of
receiver.
The would-be National banks there
upon notified the Comptroller of the
Currency of what the State Bank
Commissioner of Oklahoma was doing,
and sent him copy of the circular
which they had received from that
State official. The Comptroller prompt
ly notified the Bank Commissioner of
Oklahoma that the State had no au,
thorlty to take action against a Ma
tional bank orgnized for the purpose of
succeeding State bank. He did not
deny the authority of the State to gov
ern the liquidation of its State banks,
but after citing a number of Supreme
Court decisions on the main question in
volved, the Comptroller said:
II will be seen that a State bank con-
verted into a National bank is not COM
PEELED to nquidate It's obligations, and
you are advised that you have no authori-
cannot appoint receiver for a National
bank or impound any of It's assets. The
power TO appoint a receiver of a National
bank Is confined to the Comptroller OF
the Currency.
Which settles that part of it. But
there remains the power of the Bank
Commissio oner Of Oklahoma to require
the State banks that wish to 20 into
the National banking system to liquid.
ate their accounts with their depositors,
and he still insists that he will require
this in strict accordance with the State
law. He will therefore be able to make
it tedious piece Of business for any
State bank In Oklahoma to go into the
National banking system. The State
banks desiring to do so will either
have to wait until they can completely
settle their State banking business, or
make a transfer as to those depositors
which give their consent and keep up
their State banking deposit business un.
til they can hquidate entirely, taking
on no new State banking business in
the meantime, and gradually elminat-
ing the State accounts from their Ma.
tional banking business
. 1t will be seen, therefore. that the
readiness Of the National banks to go |
into the State banking system under |
the. guarantee folly is putting them to
q good deal of delay, inconvenience
son, but the need of it is evident.
The trouble with the bank guaranty
of deposits is that it is never ending
automatic assessment on all the banks
that are able to bear it. The chances
given to bad banking under the euaran.
ty law are so very wide that reckless
ness is inevitable in some banks and
among some bankers. The Oklahoma
guaranty law has directly fostered
this sort of thing, and the losses there
have been unprecedentedly enormous.
We find in the August number of Ma,
tional Finance the following state.
nent, bringing up TO lnte date the
losses and present condition of the
bank guaranty fund Of Oklahoma
a net loss Of $3.50, 362 was sustained by
the bank guaranty fund between April
and July i this year In taking care OF
Two Oklahoma City banks--the Planters
and Mechanics bank and the Night and
Day bank-accordfng 10 a statement by