The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1929-02-20
House IS EXPECTED
TO JOIN IN KILLING
OLD DEPOSIT POLICY
Substitute for Act Under Repeal
Would Create Institu-
tional Protection
BRISK DEBATES AROUSED
Appropriations for Fargo House
Of Mercy and St. Johns
orphanaRe Go Through

Two brisk debates enlivened the
session Of the North Dakota senate
Tuesday. The first came on the bill
to repeal the state guaranty fund law
which passed by a vote Of 80 to 9.
: The second came on the bill to ap-
propriate money for the House Of
Mercy, an institution at Fargo which
cares for girls and their fatherless
children, and the st. Johns orphan
age. also at Fargo. 1t passed % TO
II. The bill gives each institution
!. IS 900.
/. The guaranty fund repeal bill is
(. expected to pass the house without
difficulty. 1t provides that after
December 81. 1881, the present law
. for the protection of deposits In state
banks will be imperative. The guar
Anty fund law. passed in 1917, re-
/ Quires state banks to contribute to a
fund which would be used to pay de-
l posters in insolvent banks.
/. The depositors in the first two
banks which closed after the law be-
came operative were paid III full.
! Then came an avalanche Of bank
closings and the revenue was insult
ficient to meet the obligations. Ad-
vocates on the repeal said Tuesday
that 1t would require 122 years for
the guaranty fund to meet its obliga-
tons on the present basis.
I. Companion Bill Offered
L A companion bill which sets up q
new system. whereby banks are re-
.quired to deposit with the state treas
urer an amount equal to their cap
ital stock, the fund to be used for the
protection OF depositors, also was
passed.
The special fund is to be accumu-
lated in the same manner that the
guaranty fund was handled except
that payments by each bank will be
credited to the separate fund which
each bank Is requi.ed to create under
the jurisdiction Of the state treasurer.
Other bills passed by the senate
Tuesday. provided for q board Of
water well drillers and the licensing
Of drillers; q bill requiring the state
agricultural college to ascertain the
average protein content of wheat IN
certain districts and requiring grain
buyers to display q card showing the
average protein content of wheat in
the district in which the buyer Is
operating and q bill regulating the
sale Of bakery products and prohib-
iting the return of unused bakery
goods.
Conditions Caused Collapse
MI q Yn11
county, attacked the guaranty fund
repeal bill. saying the present law
had led the public to believe bank
deposits were guaranteed by the
state. He said there was no direct
obligation to continue the fund but
that q moral obligation existed not
to withdraw the protection which de-
positors assumed they had. The law,
he commended, helped thet banks and
other business by inspiring conf
dence in the banks. but that conf
dence was proved to be unjustified
because Of the fact that years of de-
flation came and the fund was
swamped with obligations. There Is
nothing wrong about the guaranty
fund law, he said. but conditions
operated to make 1t a failure. Re-
peal. he said, would leave the people
without any protection.
He contended the repeal bill is UNI
constitutional because 1t impairs con-
tract obligations and tho guaranty
fund commission already has entered
into contracts to pay $4,000 900 to
creditors Of closed state banks.
Matthaei labeled the bill reouir-
ing banks 70 deposit surplus with
the state treasurer as a "nefariouS
subterfuge" and charged that 1t was
misleading and so drawn as to be
of no benefit as protection to the
depositor.
Encourages Extra Ranks
L. w. Sperry, Burleigh county,
said other states had tried laws SIM
liar to the guaranty fund law and
they failed just as North Dakota'a
failed. The state had more banks
than 1t needed, he said, and the pres
ence Of the guaranty fund law en-
couraged the organization Of addi-
tional banks.
w. D. Lynch. La Moure county,
said the guaranty fund law looked
good when It was passed but doesn't
look good now. The people Of the
state, ct the last election, decided
they did not consider It = moral OBJ
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