The daily star-mirror. (Moscow, Idaho) 1911-1939, 1922-08-05
: 1. = = = + = + = = = = = = = = :
+ GUARANTY OF BANK
1! DEPOSITS FACTS
: AND OPINIONS :
+ BY GUY FLENNE1R
, = = = I. = + = + r = = = = = =


(Note-The following is the first OF
series of articles on the guaranty of
bank deposits, written by a well
known Idaho newspaper man and in
vestigator, who has given the ques-
ton considerable research. We pub
lish these articles for the information
of our readers and in order that there
may be an intelligent consideration
of the subject, and without necessar-
lily approving or opposing any of the
opinions stated.-The Editor)
Historical
The subject of guaranty of bank de-
posits is older than Ann and has been
misrepresented by advocates and OPP
ponents with the persistent prevari-
cation of Ananias
In New York state in 1929 this
country was furnished the first ex-
pertinent under sO-called Safety
Fund Act" There were 40 incorpor-
ated banks in the state then, with a
combined capital of SIS 100000 and
liabilities of $3O,OOO,OO0; and bank
notes constituted the principal supply
of credit, to such an extent they were
variously and heavily discounted.
Public confidence was disturbed to the
crisis point when this act was passed
to grant relief. Each bank was re-
quired to pay certain per cent of it's
capital into the fund, making all the
banks responsible for the loss the pub
lie might sustain through failure of
one or more of them.
The relief proved a myth, and
the bank fund became bankrupt in
1887. In 1912 the guaranty was eliml-
mated from the law and the subject
was closed until the enactment Of the
Oklahoma law.
Jnor 1ot11 nf oil fofa c,
have enacted guaranty laws, Okla
homa in 1908, Kansas 1909, Texas
1910, Nebraska 1911, Mississippi 1914,
South Dakota 1915 and North Dakota
and Washington in 1917. In each
state the guaranty fund was created
by assessments against deposits. The
assessments have been sufficient to
meet the requirements in Kansas, Tex
as, Nebraska and South Dakota. In
those four states Official figures)
from June 80, 1920, to December 81,
1921, 81 state and 16 national banks
failed
In the eight guaranty states, ac-
cording to the last report of the comp
troller of the currency to congress,
the total number of banks and de-
posits were:
Deposits.
State banks ....5 1852 $1,374, 886,O00
National .lS1O $l,416, 6lS ,OOO
In this table there were $225, 200, 900
deposits in the state banks of Kansas
and Washington not members of the
guaranty system Of those states, so
that amount must be subtracted to
ascertain the exact amount of the de-
pOsits guaranteed and not guaranteed
in the eight states of the Union having
guaranty Of bank deposits. So we
have:
Guaranteed deposits, 1857 banks, de-
posits 81, 149,886,00O.
Not guaranteed deposits, 25O5 banks
deposits $1,651 ,618, 900.
In other words, the public-the de-
positors of these eight states-put
more money by over $500, 100000 into
nOn-guaranty banks than into the
guaranty banks.
The guaranty system in Oklahoma
was early beset with difficulties I'M
til today the conditions are such the
suggestion has been made that the
state issue bonds to protect the guar
anty fund.
On Jan. l, 1911, there were sos state
banks in Oklahoma and 229 national, |
or non guaranty, banks The first of
this year there were 557 state and 1872
national banks, the former having |
$104 100000 deposits and the nom
guaranty banks over 100000,
Since then it has been 'sopen season"
for the state banks in that state. In
March of this year II were converted
into national banks and taken over
by the bank commissioner, reflecting
lack of public confidence in the guar
anty, or state, banks, condition
obviously not healthful for the agri-
cultural and other interests of Okla
homa depending upon sound banking.
Allowing the ultimate claimed value
Of the assets Of failed banks (there
were "A state and national banks