The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1929-01-26

CHICAGO ~ DETROIT
Tower Bldg. Kresee Bldg
toff'ciai City. state and Count, Newspaper,
BANK GUARANTY LAW SHOULD GO
The record Of gross failure made by the state bank
guaranty fund leaves other sensible outlook for it
than repeal.
Wherever tried. the plan has been failure Costly
lessons have been taught everywhere by its failure to
guarantee deposits against loss bank crashes Nearly
all the states which adopted the plan since repealed
It, Some didn't need to do The banks quit 1t and 1t
became imperative
Yet but recently, other states were asked to
introduce the scheme into their banking system
Human nature is that guble that it deceive itself
where the wish father to the thought and the thought
that bank deposits be guaranteed against by
assessment the business accumulated into fund
persisted in radical minds to whom economic laws
mo such animal"
The failure Of this law has been colossal wherever tried
s collapse should become general knowledge that other
states may be spared agitation for its trial It doesn't
work. 1t is and always nostrum. Wherever bank
failures are on scale that would make relief
srabe the scale Is always large to be beyond the
capacity Of these guaranty funds to be effective The
one story OF their operation the story of successive
swampings leaving liabilities running into the millions
beyond the ability Of the supposed relief to meet and
uquidate.
New York and Vermont first found such law un-
sound The Empire state enacted the first guaranty law
In 1879 but failed and repealed Vermont tried it,
too and likewise wiped It off the statute books after
brief trial. Texas, Kansas. Nebraska, Washington,
Mississippi South Dakota and Oklahoma have all gone
through the experience In 1ebraska the banks have re-
belled against paying further assessments owing to the
disastrous consequences enaed by the scheme are
I. confiscatory.
Oklahoma repealed its guaranty law In 1928 Texas
left $l60000o0 in claims the fund unpaid when it re-
pealed Its law In 1927 after the withdrawal OF the
from its "benefcent provisions had made the act noper-
stive In Kansas the law dead letter for the same
reason that the banks quit 1t after it had loaded up
mountain Of liabilities without hope Of paying them
of
Mississippi viii repeal it's law while South Dakota al
ready has. with soooooo unpaid and is trying another
plan, providing for surplus fund to be created by
dvidual banks for the protection Of their depostor
Washington about to vote repeal the banks already
have cast the law overheard rendering it imperative
there. too.
North Dakotas experience has been one of the most
disastrous In the period during which it tried the plan
accumulated liabilities go 0261 in claims of de-
positors Of failed banks allowed and approved by the
guaranty fund commission Claims of depositors in
banks now closed and which, it is estimated may here
sitter prove to be eligible to guaranty total
This would make total liability Of $25 3o2el for the
state to lquidate in the period OF the laws existence
which began July !. 1917. .
Against this amount. the guaranty fund has had
N445S8660 IN 10 per cent dividends paid by the COM
mission in 2o banks; has paid $solese in claims under
80 paid In full; has funds available for further pay
ents $7o37es7 and expect in estimated dividends
Of $ per cent says the receiver to be paid from bank
assets. y. 2s7555.sl: total Of 4l0.S73. e3ss6.
The balance therefore, required from the guaranty
fund to square up the state In guarantees is
Even to make 10 per cent dividend payment to banks
now closed would require 1851 1473l.
In the face Of this failure to operate is folly to con-
:ue on and keep up the drag existing banks while
the benefit to the dcposors OF closed banks is SO neg-
ge The situation involves either the ultimate paw
cnt BY the customer Of the going institution or impair
ent OF the capital stock OF the bank the present r
future It would There does not seem to be any
other way out Of the situation that been created I'm
less repeal applied. This would strengthen the re-
manning banks.
The banks which know from experience what the law
means and what It fails to do favorable to repeal on
O. ground that te law furn-hes no aprreciable bcnc-
hts to depositors In banks already closed hut burdens
thcae IN banks now operating: that the law tends to
eFt9x the banks. compared with other business that
nsng economic conditions and legislative enactments
hars desased te earning power Of bank. on the gem
- dipccsrs that the law always falls because it
su = sound hank = underwFite one operated by In
sopetents: because II serves % encourage weak and
sseN banking becauss 4 copsls the insurance COM
= - GO IL bank-to ~ peeiun,s instead Of
1le lne1sd - dspostter
DISABLED VETERANS
q tlose VIM directly share ia IL benefits the
Eant snureau y associated chiefly With government
mss,rance. but - aetisities cover much more