Askov American. [volume] (Askov, Pine County, Minn.) 1914-current, 1927-03-10
THE BANK DEPOSIT
GUARANTEE LAW

ask the press to publish the following
statement:
''Since January 1, 1921, 236 state
banks have failed in Minnesota, with
total deposits of $54,711,2 POSES. These
bank failures like devastating storms
have caused enormous financial los
ses to people all over the state; they
have paralyzed business in commune
ties affected and left tens of thou
sands of old people destitute; they
have discouraged thrift, especially
among younger. people and caused
sorrow, suffering, deaths, and suicides.
These bank failures have caused a
general distrust in banks, so that
immense sums now are kept out of
circulation.
Urge Legal Protection.
1--WE feel the hard working thrifty
people of the state are entitled to pro-
lection against such disasters, and
that the only effective way to pro-
vide such protection and to restore
public confidence in banks is to pass
good law guaranteeing payment of
bank deposits.
Our state banks are organized UNI
der laws of Minnesota, they are char
tered by the state, and the state has
assumed supervisory power over them
and approve of them as solvent in
situations. But it is a significant
fact that while the state has approved
of the banks as repositories of the
private funds of the people, it has not
The state says in effect to these in
situations, which it charters and SUI
pervises, You may receive money on
deposit in any amount from indivi-
duals and business concerns, without
giving them any security, and if you
make bad investments and lose the
money, so you cannot pay it back to
the depositors, you will be excused
and not punished. But you are not
to be trusted with the states money;
if you want state money on deposit
you must give special bond so that
the state will be sure not to lose it.
"When the state does not trust the
banks which it charters and super
vises but compels them to guarantee
it's own deposits, why then should
guarantee the deposits of it's citi-
zens?
when farmers store grains in
public elevator the state compels the
elevator man to give bonds to protect
the owners of the grain against the
loss in case the elevator should fail
When this grain is sold and the money
received for it is stored or deposited
ina bank, why should not the state
compel the bank also to provide pro-
lection against losses of deposits the
same as it compels the elevator man
to provide against loss of grain?
Opponents of the deposit guaranty
law point to difficulties in applica-
ton of such laws, experienced by
other states, and dismiss the matter
as impracticable. They refuse to in
quire into the causes for such diff
culties and simply say, 1t can't be
done We believe it can be done and
should be done. We believe our
state may profit from experiences
gained by our sister states, not only
in the mistakes they have made, but
also in the success they have OBJ
tanned. Invariably, the main causes
for failure of the guaranty laws in
various states are given as wild cat
banking, Indifferent supervision and
undue political influence by those in
terested. Are not these defects that
may be remedied? Our chief execu-
tive has recommended, and the legis-
lature will support, measures to cor
rect and prevent abuses along this
line in Minnesota. We are not object
ing to these measures. We approve
of all well considered attempts to
safeguard banks But we believe that
a specific guaranty to depositors that
their money will be returned to them
when desired is needed to reassure
the public and compel banks to CO.
operate in the matter of obtaining
strict observance of the regulations
prescribed.
Nebraska Progress Cited.
"The state that has made the most
outstanding progress in a guaranty
of bank deposits law is Nebraska
That state leads the way. 1t not only
makes all state banks responsible for
losses in deposits, but also gives all
banks a direct voice in how banks
are to be managed and gives them
the power to salvage the assets of any
failed banks for their own protection.
The measure we have introduced is
patterned after the Nebraska law,
with such additional safeguards as
experience in that state has suggested.
All costs of running banks are paid
| by the patrons in the last analysis.
While providing severe penalty for
paying interest on deposits above a
maximum rate, our bill leaves the
adjustment of interest rate to the
banks themselves.
| eve do not wish to legislate banks
out of existence We wish to con-
serve and strengthen them, and as