The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1929-02-08
south DAKOTAPLAN
| FOR PROTECTION OF
DEPOSITORS Urged
Banks Would Set Aside With
State Treasurer Annual In
stalIment Reserve
SENATORS RATHER CYNICAL
Few Exhibit Any Faith That
Such Measures Will OPP
crate With Effectiveness

HOW TO guarantee OttIlh OcPOoAso AAA
actual practice as we'll as on paper
was what puzzled the senate bank.
/. ing committee when it considered
senate bills 104 and los Thursday eve"
.ning. The committee was still crop"
ing in pitch darkness when 1t rose
safter two hours Of scratching heads
sand all talking at once at times.
!. Bill 1O4 provides for the extinction
of the present guaranty system. which
has piled up a liability margin OF
approximately $14,0O0,00O with no
hope OF paying, short OF l22 years,
experts in higher mathematics nave
calculated.
: Substituted Illustrated
. Bill los offers substitute. Instead
of the strong and prosperous state
banks being dragged by the dead
ones, it proposes the creation OF q
protective reserve to be deposited IN
annual installmentS out of net prof.
its. with the state treasurer, this TO
be for the protection OF its own de-
positors. The limit OF the reserve Is
to be the amount Of the banks cap
ital.
An example to illustrate was cited
when G. C. Wattum, reading from
leaflet statement, said 1t was the
standing OF bank which he knew.
It has a capital Of $4,000 and de-
posits of 1851 600. This bank would
pay 500 annually, into the protective
fund. In less than 20 years, assisted
BY interest, it would have paid up the
equivalent OF its capital and Its FUR
her assessments would cease and the
protective fund stand completed.
Plan Doesn't Excite Enthusiasm
This plan is that adopted by South
Dakota when its guaranty fund failed
like those Of every state that has tried
the plan. leaving about $2O,OOO,OOO
unpaid. c. G. Wattum said the main
object is to get rid Of the old guar
antee and relieve the other state
banks OF the drag and burden it has
become. The new plan had been
cut in to induce discussion and to
offer something II 1t were desired
still to maintain some sort Of guar
antee, he said.
The plan did not get far. Bank
deposit guaranteeing has lost its rep
utation and there was q question
whether 1t was worth while to bolster
up conditions by even the new idea.
It was commented that II the old
system is maintained, the open banks
will be paying out assessments which
do not benefit its depositors at all
and do not provide the cash In suf-
ficient amounts to make an apprect-
able dent in the piled-up millions Of
guaranty allowed on claims in failed
banks. However, If the new system
were adopted, the money paid by q
bank would at least give some pro-
lection to its own depositors, In which
respect bill los was conceded to have
some merit and to that extent only.
National Banks Contrasted
]. E. Davis, a Goodrich banker,
made plea to get rid Of the old
system. He emphasized the drag 1t
was on open banks. He said the only
real guarantee was In the integrity
and business capacity Of q banker.
without that there scarcely can be
said to be guarantee. he said. While
the state banks have been relying on
a system that has failed every time
it has been tried, the national banks
have been going along without the
benefit Of the state guaranty and
have been thriving, while the guar
anteed banks have failed.
This led Senator Ettestad to sug-
gest that il the new bill be put
through it be not termed a guar
anty." Call it anything else. the
senator urged, but not what it Is not
and will not become.
Hamilton Sees Small End
That was the way Senator Dave
Hamilton felt about it. He penciled
about on some note paper q while
and then announced that the more
reserve q bank would deposit with
the state treasurer under bill los, the
less would be the guaranty protection
to the depositors, on the ground that
the deposits were likely to increase
with the years. The members could.
1T get his viewpoint and her re-
peated 1t several times for their bene-
lit.
Only two men came armed with
figures to throw light on the bill. One
was G. G. Wattun, the other Fred w.
Cathro, guarantee fund inspector.
Wattum made the statement that It
would take 122 years to clear the al
loWanceS on the fund made by the
commission, at the rate assessments
were coming in now. He read the
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