The Donaldsonville chief., 1914-04-11
e following communication iron

Representative Charles E. Schwin,
or lDerVllle to the editor of the Dali.
States, on a subject which is attract
ing wide attention in Louisiana a
the present time, was published il
last Sundays issue of our New Or
leans contemporary:
4 Plaquemine, La, March 25, 1914.
Editor States:
Under the caption, Guaranteeing
Bank Deposit" in your issue O
March 23, you discuss the proposition
at some length edltorlaiIy, and, nat
| ufaIly, from the point OF view sole
ly OF the financial interests OF New
Orleans. Whether that point of view
be right or wrong is not the Ques
ton just at this time, however.
Your paper being usually fair t
/ IFS opponents in thought as well a.
III politics, am reluctant to believe
II would knowingly mlsrepresent al
issue that is becoming OF increas
ing Importance to the people OF the
/ country. Thus 1t is / am taking tbs
liberty of forwarding you this com
-nunleation with the request that yot
give space to the same
l might say at the outset thai
when you say Representative Chas
SchWing of IberVllie is a strong be
lever in the Oklahoma plan of guar
antee OF bank deposits, you do no,
state what is exactly true. AS a
matter of fact, l have always urged
the Kansas plan as being the broades
and best yet devised, having studied
| the laws of Nebraska, Kansas, Okla
homa, and Texas on this subject
| Under the guarantee law Of Kansas
it is optional with the banks as te
whether or not they will join the sys
tenn. This, however, may be consid
cred a difference in degree rather
| than in principle.
| To say that such a principle is
wrong is no different from remarking
that the principle of fire insurance
| is wrong. Because one system might
have suffered losses by and through
its failure to accept proper risks Ger.
tainly cannot condemn a system any
more than we could condemn the
principle of fire insurance because a
lire insurance company had run
against the rocks because of care,
lessness in selecting risks. You
might say, with equal unfairness, tina
the principle Of fire insurance Is
bad because a certain company &C.
cepted all kinds of risks without the
proper Investigation and in conse-
quence suffered severe losses. The
fault most certainly would not be
with the principle or the practica bill
ty of putting that principle into op-
GRAFTON, but with the management of
the company. So, beg your leave
to call your attention to the opera
ton of the law in Kansas, in Ne
braska, and in Texas, where careful
and rigid Investigations into the af-
fairs OF banks are necessary before
they can enter as a part of the sys-
TEN.
In all these states the law has op-
Grated eminent1y satisfactorily. And
this in spite of the stoutest opposi-
ton when they were enacted by
bankers their attorneys and news
paper allies. In Nebraska it is obli-
gatory on all state banks, and when
the law was passed it was fought al
most to a man by the banking in
Eterests. Kansas followed Oklahoma
IL adopting the system, and since it
has been put in operation in that
state only one guaranteed bank has
failed-and the official who wrecked
it is now serving a prison sentence.
Depositors, to be sure, lost nothing.
And since the law was enacted in
Texas the deposits of the state banks
have doubled. Three small banks
failed in that large state since the
enactment of the measure, entallIng a
loss of something over a hundred
thousand dollars. about half of which
vas recovered from the assets of
the banks and paid back to the fund.
In these instances, Of course, the de-
positors lost nothing, being paid in
full. The guarantee fund in Texas
is s2,000,0O0.
AL critics of bank guarantee
law point to Oklahoma in order to
endeavor to discredit the advocacy OF
such a measure. You never hear
the bankers in New Orleans, or their
country allies, Or their allies of the
press, say a word about the opera
ton of the law in Kansas, in Ne
braska, and in Texas. Indeed, one
would not think they knew there
were such states in the United
States, according to their writings
and advertising of this subject in
their opposition. Thus it is they
manifest wholly a selfish interest and
display no interest at all in the
great body of depositors in the state.
And there is one very important
point these critics of the guarantee
of deposits overlook, and this is that
all the losses from state bank fall
ures in Oklahoma have fallen on the
banks. Though there have been
have lost nothing. This will prob
ably serve as a sufficient explanation
of the reason why there is no imme-
diate prospect of the repeal of the
law in Oklahoma. It is the reason
assigned by critics of the system
there, as well as by the vast majori-
tics that favor it. The law in Okla
homa has been amended and, very
properly, the management of the
fund has been changed, but the guar
antee feature has not been eliminat-
ed. In paragraph eight of your edi-
torial you say, '.To meet the situa-
stion the legislature (of Oklahoma1
mas adopted a new banking law with
the guarantee feature eliminated" /
challenge that assertion by the States
and feel that. upon inquiry and in
ypsfigatiOn Won will correct an err