The Ellensburg dawn. [volume], February 04, 1909, Image 1

About The Ellensburg dawn. [volume] (Ellensburg, Wash.) 1898-1914

Image provided by: Washington State Library; Olympia, WA

                
TpAWN OF BRIGHTER HOPES—A .OK THE NATION'S SAFETY ap. „
i«BBSSS=— ================ SAFETY—A PEOPLE'S SHIP OL' 1 STATE—A GOVERNMENT OF JUSTICE KOU ALL Mi I
Vol. xvi.
GUARANTEED BANKS
SPEECH BY W. J. BRYAN
Mr. Bryan's Speech on the Guaranteed Banking System as
Advocated by the Democratic Party. An Ideal Exposition
The Proposed System. Worthy of a Careful Perusal
Let v* take the tit-st sentence, that
—) honest and prudent banker would
pi ta<*d to make up for the dishonesty
ud imprudence of others." Is not
(til true of all restrict ions on banking- 1
rjQHDOttbe honest aud prudent bank
tr under existing laws, sntTer iv order
thai the depositor may be protected
Ken the dishonest aud imprudent? If
M had no banking laws at all. and
bukiDf was done by private individ
ails, tht honest and prudeut banker
teuld save the money that he now pays
loreoforeed examinations of his bank,
ltd be could at times make interest on
ipart of tbe money which he is now
nqtured t* keep in his vault as s rigid
reserve. But becatise some bankers
IN sot prudent, those laws place a
burden upon the good as well as upon
tat bad, it being; difficult to distinguish
the prudent banker from the imprudent
one until a bank actually fails.
In like manner it might be said tiiat
if til people were careful about tire,
fire insurance rates need not he as high
iithey are, but thecareful have to pay
higher rate* than they should because
now are not careful. Life Insurance
rates are higher than would be neees
mrj to cover the actual risk if every
body took care of his health, an 1 here,
ton, the cautious are bnrdened because
torn* are careless of their health. Ail
insurance is open to the same objection
sad yet insurance of all forms is grow
ing, and the insurance of de(>ositors is
glowing in popularity more rapidly
than any other form of insurance—and.
taay add, it yields the largest return
on tbe investment.
Mr. Taft com plains that "no one can
foresee tbe burden which, under this
lysum, would be imposed upon the
sooad and conservative bankers of the
country by this obligation to make good
ham caused by the reckless, specu
lative and dishonest men," etc We
hive tbe past to guide us, and we have
nam to believe that tlie loss will be
leu in tbe future than in the past, be
came when banks become mutually
responsible for each other's dei><>sits
they will be suiliciently interested in
etch Other to favor better regulation
tad greater restrictions.
What has Mr. Taft done to protect
depositors from recklessness and specu
lation? While ha refuses to protect
dspositors, he praises the Aldrich-
Vreaiaod law, which invites specula
tion and stock jobbing. In declaring
that the syststu proposed by the demo
crats "would remove all safeguards
•faiattrecklessness in banking," Mr.
Taft betrays an ignorance of the sub
ject, for the plan does not propose tbe
rtaoval of any safeguards. Infact.it
Mtemplates stricter regulations of tbe
banks,and Oklahoma has already made
ta»banking regulations stricter.
He declares that "the only benetit
Wold accrue to the speculator, who
Hold b* delighted to enter the bank
ing business when it was certain that
bsoould enjoy any profit that would
**roe, while the risk would have to be
••anted by his honest and bard-work
ingfellow." The present banking law
"quires that a certain amount of capi-
Ml (ball be invested in the business.
•»d that law would still stand To
•Mer the banking business, therefore,
• man would either have to have the
•Pital, himoelf or secuare the conti
••m of men who bad tbe
•Mitel And this capital, together
•Kb the 100 per cent liability, would
guaranty that the stockholders
*°"M net intentionally select careless
•Mall. Why would a "speculator"
"» "delighted to enter the banking
•"Ineai" under the guaranty system?
Hi ii not relieved from pecuniary obli-
Wion, nor is he relieved from criminal
liability. fj 0 would have nothing to
Win by carelessness, nor would the
"Wkbolders have anything to gain by
bWerence.
Cbe EllensiHirg Dawn,
Published Every Thursday
Ihe chief cause of bank failures is
the making of excessive loans to direc
tors or official! of the bank. This is
ihe fruitful cause of disaster, nod it has
been Impossible to secure legislation
protecting hanks from their own offl
otala and directors. Why? Became
there has been do mutual responsibil
ity. \\ hen all banki beoome liable for
the deposits of each, the stockholders
| will insist upon the. enactment of a law
| making it a criminal offense for a bank
j official to loan more than the prescribed
amount to one individual. At present
we have a law prohibiting the loaning 1
of more than one-tenth of the capital
: and surplus to one person or corpora
j tion, but the law is only directory. Ol
course, the comptroller can suspend a <
| bank 'f it violates the law, but the law
jis not enforced, because tho enforce- 1
i ment of such a law would throw the n
i punishment upou innoceut stockholders I
and upon the community, since the
j luspension of a bank inflicts a great':
10-s upon stockholder* and disturbs the I
I business of the city or town in which
the bank is located. i
Tho law should make it a criminal
offense toloau more than the prescribed i
j amount to oue person, aud we would; 1
| probably be able to secure the passage
iof a law prohibiting market speculation 1
by bank ollicials. 1
The Oklahoma plan is working satis j
| factory. A bank recently failed in
I Oklahoma: within forty-eight minutes
| after the notice of luspeniion, the ofti- j;
| cer iv charge bad authority to pay all I
depositors, and then the banking board
, proceeded to collect tie assets of the
: bank and to prosecute the officials
I criminally. When the business wa»
cloied up, the stockholders passed a
resolution thanking the state board for !
' its prompt action, the action of the
board being a protection te the stock- ;
holders, as well as to the depositors
and to the public generally.
I■« I *
Compare this failure under the guar j
gnty -.ystera with a failure where there j
!is no guaranty. In Oklahoma th<f bank i
commissioner telephoned the farmers
to come in and get their money, and \
the answer wa«: "] am busy today with
Imy crop: I will be in in a day or two." (
In Cleveland, Ohio, a bank failed j
about the same time, and the paper- (
announced "twelve thousand infuriated
Italians stormed the closed doors of the
; busted banking house of Costan Liopea
on orange street, today. The police
, drove the crowd back. " ,
An objection is sometimes made to the .
1 guaranty law that a "new bank would
' start up across the street," and. being
able to promise its depositors absolute
security through the guaranty law,
! could draw the deposits away from con
servatively managed bank* by offering
! a higher rate of interest than the latter
'could pay. This objection is urged as ,
jif it were an unanswerable one. Hut (
! let us see how easily it can be met
! Since the law makes all of the banks
liable for the obligations of each bank. |
and in Oklahoma the banking board)
has already lixed the rate of interest )
!that can be paid to depositors. Ac- I
cording to the rules of the banking
board, no bank is permitted to pay
more than three per cent on short-time ,
I deposit* or more than four per cent on (
time deposits running for six months
It has also been urged as an objec (
tion that under the guaranty system a
big bank would have no advantage ,
ov „ a little bank, l iven if this argu
ment were found, it could not weigh
the advantages of the system
for bank, are made for the people, not I
be people for the banks. WW!, there
IreUan.a.'es in having big banks, (
th () advantages are DOt sufficient o (
wify the jeoparding of,he deposi
tor or of tbe builneM Interests of a
matter of fact, the big- hank
l J^^^mA S County, Wash., February 4, 1909
WOUld still have several advantages
over tho small one. In the Brat place
it could make larger loans than the
small hank. For instance a bank with
11,000,000 capital and surplus could, as 1
at preaent, loan $100,000 to one person,
while a bank with $100,000 capital and
surplus could only loan $10 000 to one
person. This advantage would in it
self draw to tho large bank the large
! deposits and the men doing business'
I upon a large scale, ford-posits follow
accommodations,
I Then, too, there is a certain business'
advantage iv depositing with a big
I bank. 1 1 | 8 worth something to be aide
to refer to a big bank when one's fi
nancial standing is being investigated,
and worth still more to have the advice
of a man of large business experience
when business enterprises are being
considered.
Besides these, there is a social ad
vantage in being on good terms with
the men who are prominent in the
banking world. Surely the big bank's
prestige will be, worth enough to ii
under the guaranty system; it should
not begrudge the smaller banks tbe
advantage which the guaranty of de*
posits will bring to them.
I cannot pass from this subject with
out referring to the fact that the big
bank needs the guaranty as well as the
little one, for big banks fail as well ns
small banks, and the bigger the bank
tho greater the calamity to the com
mnnity when it fails. .No bank is so big
as to be absolutely beyond danger, and
a community needs protection against
the big banks' failure even more than
against the failure of the small bank-.
It has sometimes been objected that
the guaranty system would bring into
the banking business a lower class of
men and reduce the average char
acter. On the contrary, the guaranty
of deposits, 1 submit, would, if ii
made any difference in this respect,
bring into the banking business a bet- i
tor class of men and raise, if that is
possible, the average of character. 1
is not to a man's discredit that he is
not willing that one of his fellow men
should lose money on his account. It
is not a mark of character that a man
should be careful of his good name and
Considerate of the esteem of his fellows?
At present a successful farmer or busi
ness man may be induced to take stock
in a bank. It ma) be that his name is
desired to give standing and credit to
the bank, let! such a man is constantly
haunted by the fear that a bank official
men tie guilty of criminal conduct
which will bring the bank into insol
vency. It is even possible that, the
bank's assets may be entire); dissipated
and that tbe honest citizen, who has
become a stockholder, may either be
compelled to go beyond Ids legal liabi
lity or meet the bitter criticism of the
depositors who have suffered by the
failure. Would it not ba worth some
tiling to the stockholder, in peace of j
mind, to know that the maximun of
bis loss would be the value of ids slock
and the 100 percent liability, and that
no depositor could lose anything'- 1
am convinced that the guaranty of de
posits would not lead to degeneration
in the personnel of the bankets.
To justify a law guaranteeing depos
itors, it is not necessary to show that
that tbe advantage to the banker*
would amount to more than the tax.
The examination of the banks would
continue to be made at he expense of
the banks, even if it were certain that
the examination was of no pecuniary
advantage to the banks. Tbe law
would continue to require a certain
amount, of reserve to be kept, on iiand, j
even is it were certain that such a law
brought, no pecuniary gain to the bank*:
and SO the banks ought to lie compelled
to insure their depositors against loss. |
even if it, could not be shown thtit such
insurance would bring a compensating
advantage to the bank. The bank
charter has a value: if P. were not val
uable the bank would not be organized.
The bank charter is a gift from the
people through the law, and the people
who authorize the establishment of a
!,a,,k have a right to demand, in re
turn that tbe bank shall keep the
dee which it gives when it. invites
deposits, and make good its promises
of security to those who deal with it.
Headache cornea from tired, over-taxed
train nerves. Dr. Miles' Antl-FalM Pills
relieve the pain and quiet the nerve*
Robt. A. Turner, Editor
MAY MAKE BANKS
COMPLY OR QUIT
Proposed Bank Guarantee Law of Kansas is a Drastic Propo
sition-Only Deposits Drawing Less Than 3 Per Cent In.
terest Insured—Banks Put Under Bonds in Guarantee Fund
Topeka, Kan. Jan. 30.- Tbe admin*
j istration bill outlining a plan lo guar*
an tee bank deposits made its appear*
ance today. It lias not been Introduced
in either house yet, but it was the sub
ject of an ail day conference in the
governor's office. At the conference
were Goverdor W. it, Stubbs, Speaker
J. N. Dollev, Lieutenant Governor
Fitzgerald, members of the banking
committee of the two bouses and a few
bank era.
While the bill doe- not meet the ag
proval of all tbe bankers present or
some of tbe members of the banking
committee, yet Governor Stubbs be
lieves it is sound, and bis friends w ill
try and push it through. It was drawn
by William Macl'Vrran. a Tepoka
banker.
Senator F. 11. QuinOJ of Saline is
opposed to it. Me told Stubbs SO. He
declared that its principle was wrong,
and thai it would uot meet the demands
of the people, He will make a stand
for bis own bill.
WH A T PEOPLE WANT is MONEY.
P, W. Goebel, a banker of Kansas
City, Kan.;said the feature requiring
banks to put up bonds instead of casb
weakens the measure.
"What people want when a bank
fails is money," said lie. "not bonds."
i "The trouble Is,"said (juiuoy, "the
I bill takes assets away from the depos
itor in order to create a funu to pa\
those depositors:''
•The bond feature is all right," sain
Stubbs. "It gives soundness and sta
bility to the guaranty proposition. [I
the banks don't want to put up bonds,
! let them put up cash."
Section 1 authorizes the directors ol
all incorporated hanks, by resolution,
to empower I lie banks to participate in
: tbe "Kansas l!.iuk Depositors'Guaran-
Ity Fund." Before any bank shall be
come a guaranteed bank it shall file
resolution of the directors with tbe
I state bank commissioner. He then
shall make a rigid examination of the
bank, and if he Bods it, solvent and
'obeying all the banking laws of the
state, then be shall Issue it a certificate
[ showing that its deposits are guaran-
I teed bj the fund.
MUST DEPi >SIT H< >NDS.
Before receiving a certificate of ad
mission, however, each bank must de
posit with the state treasurer to the
order of the bank commissioner ap
proved government, state or municipal
bonds to the amount of $500 for every
1100,000 in deposits or fraction thereof,
No bonds shall be aecepetd, except
those which it is permissible under the
law for the state school fund to buy.
The bonds shall be charged as asst ts
on the bank's hooks. This would rai:-e
something over * 1,0(10,01 Ml for tbe fund.
Section 'A provides that when a bank
becomes insolvent the bank commis
sioner shall proceed to wind up its af
fairs and issue certificates to deposi
tors, which shall bear .'1 per cent inter
est After tbe bank commissioner or
receiver lias realized all he can upon
I tie bank's assets, Including liability of
stockholders, he shall call Qpon the
other banks to put up their share of
amount still duo depositors of trie fail
ed dank, such share to be based on the
amount of its deposits compared to
other banks.
ONLY .» PER CENT DEPOSITS
This money must, be paid into the
fund within thirty days after notice is
served. The commissioner then shall
check against it to pay the depositors
iv full. The to'al assessments shall not
be more than one-fifth of 1 per cent ol
the average deposits In any oue year.
I f the limit of assessments In any one
calendar year shall not, provide enough
funds to meet the deficlenot of failed
banks, the depositors shall be paid pro
ruta aud be required to wait for tlual
payment until the next assessment is
available.
If a bank refuses to remit its share
when called upon, the hank commis
sioner shall prooeed to sell enough of
that hank's bonds 00 deposit in the
fund to meet iis assessment, and also
expel it from the guaranty fund and
require it to keep posted in a conspi
cuous place in its building a notice that
it lias so withdrawn.
According to section 5, deposits
which draw more than •'• per cent inter
est shall not be guaranteed. Any hank
which advertises that Its deposits are
guar.inted must print in the same ad
vertisement in a conspicuous place that
it does not guarantee deposits draw ing
over per cent imerest.
MI ST COMPLY OB QUIT.
,\ solvent hank, retired from busi
ness, is permitted to receive hack the
Donds it has on deposit with the treas
ury
Any hank which violates the provi
sions of this or l he regular bank log act
and refuses to comply with the law
within fifteen daya after it receives
Mich notice from the hank commission
er shall he liquidated,
Section 12 authorizes national hanks
10 participate in the guaranty fund by
putting up approved securities on the
Bame basis as state banks; by permit
ting slate examiners to examine, them
and agreeing to pay the usual fees for
such examination. National banks
will he allowed to withdraw from the
state guaranty fund whenever congress
enacts a law for thy guaranty of de
poslts in national banks.
In order to make the law as effective
as possible it is also proposed to amend
the present state banking law to pro
hibit hank officers from securing loans
from their own banks; to forbid over
loaning, and to require examiners to
forfeit their positions for their failure
to discover the true conditions of a
hank.
It Is abo proposed to repeat the law
requiring bonds for public deposits,
either state, county, or city.
Ask Yoursalf the Qjcti >n.
Why not use Chamberlain's Liniment
when you have rheumatism? We feel
sine that the result will prompt and
satisfactory, it has cured others, why
not yon'/ It costs but a trill". Price,
25cents; large si/..» 50 cents. For sale
h\ < Iwl Drug Store.
□ SOim: FUN Q_
" A ititii- rim bow and then
Is reltabod by tbe boat of men.'
A German addressing ins d,>g aids:
• You vas only a dog, i>.«t. I vish [ vas
you Yen you go mitt de lied in, you
shust durn round dree times nnd lay
down. Yen Igo mitt de lied in I haf
to lock up de hi ace uml vind de clock
und put de cat oud und undrcaa myself,
und my vlfe vakes up und scolds n c.
Den de haby cries und 1 baf to VI lk
him up un do'vn: den maybe yen 1
shust go to sleep, It's time to get up
a'jain. Yen you get. ay yon shust
scratch yourself a couple of times und
stretch und you vas up. I haf to c,uick
lite de lit c, und put. de kittle on. scrap
mlt my aife already, und maybe get
some break-fast. You play all tay und
haf plenty of fun. I haf to york all
day und haf plenty or trouble. Veil
you die, you's dead.
Kittitas Will be Heard From
It is no exagoration to say that more
titan a million people will visit the
state of Washington the routing sum*
mer with the lixed purpose of investing
money in the stale, many of them with
the purpose of remaining here to make
permanent homes. Kiltitis ought to
boon the alert to get her portion, but
what is being done along that line will
develop later.
No. 5