Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-02-23
GETTING THE MONBY.

a AAS PA~SSSO W 0~A0AA0 S0S
on the theory that the bank exists,
not as q source Of capital, but IS an
agency for the quick and convenient
transfer of money-or credft-need-
cd for the ordinary and current
transaction Of business. Where cap
ital - to be raised for permanent in
vestment provision Is made for this
through other agencies, such a. bond
ness while roughly Classified a
banking. is not included within the
functions of the, ordinary commercial
bank.
Tho depositor places his money in
a hank in order that it may be kept
safely for him. and that he may OBJ
tain it promptly when he requires it
In order that these two objects may
be realized legal safeguards have
been thrown around the banking
business. When a hank is conducted
in such = ann that either safety
or flexibility is seriously impaired. the
bank may be closed and l%iquidated.
In order to provide an additional
safeguard, the state Of North Dakota
has enacted a deposit guarantee law
be levied on all state banks for the
creation Of a fund out Of which shall
be paid to depositors in closed banks
all amounts due them which it has not
been possible to realize from the as
sets OF such banks themselves. The
law provides for an annual assess
rnent of one-twentieth of one per
cent OF the average daily deposits in
each bank. with permissible addition
al assessments of similar amounts, but
no more han our such assessments
nay be made in any one year. When
The fund TO the credit Of the guaran-
III fund reached one per cent of the
verage deposits the assessments shall
fase. he annual assessments to be
>:lned when the fund falls to three
...ils of one. per cent of the de-
AIS. The purpose is to keep on
Id at all times enough money to
- care OF the claims of depositors
SEED banks. u
!e sLockholder in a closed bank
$50 liable to assessment. If his
has mot been paid for in fill it
.St be Iaid, and then he MAJ be
,A!rcd to pay a sum equal to the
sa!ue OF his stock, provided so
a" assessment is needed to
[ the liabilities of the bank.
t ider ordinary circumstances these
yards arc adequate to protect
It depositor against ultimate loss.
=: no rules and guarantees can pro-
I the depusitor~in an insolvent bank
rom Inconvenience. His funds are
ID up Indefinitely. even though
az may be assured of ultimate pay
lent in fun he will suffer the results
II delay. Nothing can take the place
Il the security afforded by the per-
so..ai character n the business ex-
.3@rience OF the men who operate the
-,anlls.
Under tins present circumstances we
ave a situation not contemplated
sFhen our banking laws were passed.
crop conditions in certain sections Of
.te state and the general shrinkage
in commodity values would in any
case have created a condition reauir-
ing careful management to avoid
trouble. But if the vast public funds
of the state had been left as formerly,
distributed generally at the discretion
of the local a,thor;tiee AZ tho =,
munities in which they arose. the
crisis would have been passed with
out serious embarrassment. AS it is,
the Bank Of North Dakota has reached
out and gathered in all these funds.
first centralizing them, and Their re-
distributing them in defiance Of all
sound business principles, and very
largely for the direct promotion Of
political enterprises. The result is a.
crash in which bank after bank has
closed. The guarantee fund, under
the rate of assessment provided for,
cannot. yield enough in a generation
g to take care Of the probable deficits.
In the meantime the ~depositors must
wait to SEE what can be realized
from the banks themselves, and then
they must wait indefinitely for the re-
uoainder.
The chief interest that the depositor
has is in getting his money. 1t is
evident that if his money id in a
closed bank he must wait some time.
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