The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1911-05-08
OKLAHOMA BANK GUARANTEE

OhbAdOMA bANh GUaRAN IGG
Governor Lee Cruce of Oklahoma
trying TO stem the tide of the reaction
against the bank guarantee law of that
State, is out in long statement de
Tending it. He defiautly announces
that the State will not repeal the law,
and will not shrink from any test
which involves "cither the overthrow
of the banking law, or the practical
elimination of the National banks from
the State"
This statement is undoubtedly called
forth by the sharp and widespread crit
icism that has resulted from the ap-
parent failure of the bank guarantee
law in Oklahoma The frequent as
sessments on sound banks to make mp
for the deficits OF unsound banking
institutions have discouraged the bank
ers of that State, and good many
Of them are preparing to change their
institutions from State banks to Ma
tional banks.
When the bank guarantee law first
went into effect in oklahoma, con-
siderable number Of National banks,
which were forbidden by the Comp
troller of the Currency to enter into
any bank guarantee scheme, gave up
their National charters and changed TO
State banks. Now the reverse process
is going on; many banks in Oklahoma
are changing from State banks to Ma
tioral banks. The result undoubtedly
will be precisely contrary TO what Gov
ernor Cruce expects. Whn. he wishes,
according to his stat .mcnU. is to drive
the National banks out of the State
Put what he actually will accompE sh,
and what the State of Oklahoma will
accomplish, will be to drive out the
State banks and leave nothing but Ma.
tional banks in that State.
1t is a plain, practical business prop
osition, easily understood. Suppose a
man of capital appears in Oklahoma
and is invited to go into the banking
business, establishing a State bank He
looks around, finds that there has been
good deal of wild banking done there,
some very serions bank failures, and
that the State banks have been called
upon repeatedly to make good on losses
not their own, but losses of reckless
bankers in various parts Of the State.
The capitalist, let US say, presents this
feature of the case to the Governor,
and the Governor tells him that the
State is bound to maintain its bank
guarantee law. The capitalist may
then say, "But there has been a good
deal of reckless banking here have no
means of checking that reckless way
of doing business; T have no financial
interest in these reckless banks and
cannot assert or exercise any control
or saving power with respect to them.
Why should l put my money into a
bank here. which ] will have TO guar
antee myself, and perhaps at some risk,
and also will have to help to guar.
antee and make good the actions of
others who do an unsafe business in
defiance of sound principles and make
ME pay for, their bad methods and
failures?'
Under such circumstances, can It be
conceived that sane man, having
money at his disposal, would enter into
the State banking business in Okla
homa? If he goes into the banking
business in that State at all, he will
certainly establish National and not
State bank.
1t is on this ground that we believe
that the expectation of Governor
Cruce, that National banks will be
driven out Of Oklahoma, will be disap-
pointed. The maintenance of the guar
antee law will act in precisely the re.
verse way; it will drive out State
banks, and make all the banks in Okla
homa National banks; because in a Ma
tional bank business no officer or di-
rector of the bank is responsible for
any other bank than his own, and that
is the only true business basis upon
which q banking business can be run.
The guarantee plan would, in a time of
panic. bring all the banks tumbling