PT"?'t'!?'W",.'WJ'1' - - -,
JANUARY i 5, 1001
5
national banks have been organized Bince 1900
when the requirements of capital stock was re
duced to 25,000 as the minimum. This is
382 more hanks than the entire number in
existence when the law was changed In this
respect The reduction of the minimum capital
stock requirement to $25,000 has doubled the
number of national banks in eight years. A
substantial increase in the amount required as
a minimum capital for the establishment of state
banks would have a salutary effect in keeping
the number of banks within a satisfactory limit
and also provide greater security to the de
positors. It has been claimed that in the state of Okla
homa the guaranty of deposits law has led to
the issuance of an excess of bank charters and
the establishment of too many banks with the
minimum of capital. I have examined the last
report of the comptroller of the currency as to
the organization of national banks in that state
to ascertain if there might not be general causes
which have led to a rapid increase in the issuance
of bank charters in Oklahoma, such as are in
cident to the settlement and development of a
new state, and having no relation to this guar
anty law. I find by way of comparison that
whereas since 1900 there have been eighty-five
national banks chartered in Nebraska, eighty
four in Kansas, forty-three in Colorado, twenty
four in Washington and twenty-six in Oregon, in
Oklahoma during, the same time there have been
establTshed 312 national banks, twenty-three of
which have the smallest capital which the law
permits.
As to the amount of assessment to be levied
in order to provide an adequate fund for the
prompt payment of depositors of insolvent banks,
I would suggest that one-fourth of one per cent
be levied upon the deposits as shown at the last
statement published prior to the commencement
of the operation of the law, and this assessment
to be followed with additional levies in like
amount at periods of six, twelve and eighteen
months thereafter. After the accumulation of
v a guaranty fund equal to one per cent of the
.average deposits in the guaranteed banks, an
annual tax of one-tenth of one per cent should
be levied, because it is necessary under a proper
system of. insurance that the prosperous years
(shouid pile up a surplus fund to provide for the
inevitable demands of less fortunate times. As
an additional security against any possible emer
gency, such as extraordinary demands upon the
. fund, the board should be empowered to levy
an assessment of not to exceed two per cent
of the average deposits in any one year. While
this assessment might never be levied, the
power to use it would have a sustaining effect
in times of possible panics. Such provisions
would result in accumulating in eighteen months
with the average of deposits remaining in state
.banks as at present a guaranty fund of $642,
351. This would be $127,097 more than the
entire amgunt of deposits involved in bank fail
ures in this state in the last nine years. It is
three, timeji the amount that would have been
-necessary , to have paid upon demand all the
money due depositors in failed banks during
the year with the heaviest failures of any in
the past decade. It is seven times as much as
would have been required to pay immediately
all of the deposits tied up in state banks during
any one of the last seven years. With the addi
tional amount'that would be contributed to such
a guaranty fund during the years when no fail
ures would occur and added to this the power to
raise in any one year by extraordinary assess
ment six times as much as has been placed in
jeopardy during the worst year that we have
lexperienced since the present law was estab
lished. It is my judgment that such, a system would
' be a rock of refuge for the banks and for the
people in the fiercest financial storm that may
come. These comparisons, you will observe,
are based upon the experience developed under
our present law. With the additional safe
guards and requirements, which I have indi-
" cated, the demands upon a guaranty fund should
be -still lighter. Indeed, your first purpose
; should be to so surround the banking business
. Tvlth safeguards and practical regulations as to
make our system the safest and best in the
republic aside from any sustaining force of a
' guaranty fund and thus-you will make the de
v mands upon your guaranty system so light that
it can not fail.
At this time 'I want to congratulate and com
mend the management of our present banking
department for the splendid results it has se
cured under the present law. It is the showing
of exceedingly small losses sustained under our
present management and system which gives
The Commoner.
us confidence to believe that with improvements
in our laws as to capitalization, management and
control a still bettor showing can be accom
plished. The proposed guaranty fund under
such a system as has been suggested should
be deposited with the state banks under regu
lations similar to our present state depository
law or with such additional security as the legis
lature may require. The proposed law should
provide that national banks may avail them
selves of the advantages and protection of the
guaranty fund under suitable provisions and
satisfactory showing as to the condition of such
banks to the banking board.
The banking board should be empowered to
fix the rate of Interest to be paid depositors by
banking corporations operating under the guar
anty of deposits law, or if this be thought too
great a power to confer upon them, the rate
should be fixed in the statute by the legislature.
I have gone into the matter of these proposed
changes in our banking law somewhat fully, be
cause the legislation asked for is new in part
and therefore has met with some opposition. As
a last word upon this subject, I want to impress
upon you to the utmost the responsibility placed
upon you in dealing with this question, and to
urge you to remember that in whatever you
may do you must be fair alike to the banker and
the depositor, and the law enacted must stand
the severest tests of business experience.
TUB GOMPERS-MITOHELL MORRISON CASE
When judges administer the law, their de
crees, though manifestly erroneous, should be
respectfully obeyed. This 13 necessary to good
order. But if judges usurp authority, their
lawless edicts should be ignored. This is neces
sary to the preservation of liberty.
For that reason Samuel Gompers, John
Mitchell and Frank Morrison executive officers
of the American of Labor, and editors cf "The
American Federationist" are worthy of all
commendation for having ignored a judge's in
junction which assumed to control their public
utterances. They stand in this respect, not as
labor leaders merely, but as editors and Ameri
can citizens jealous of their fundamental rights
'of editorship and citizenship. By ignoring an
injunction destructive of their -constitutional
right to print and publish upon responsibility
only for abuse of the right, and solely to a jury,
they have been vindicating constitutional guar
antees of the first importance. The fact that It
is a judge instead of an executive whom they
have thereby disobeyed, makes no difference.
Judges may be tyrants, too; and it Is as true of
them when they usurp power, as it Is of every
other kind of tyrant, that disobedience to a
tyrant is obedience to the law. Louis F. Post
in the Public.
MR. ROOSEVELT AND THE TENNESSEE'
IRON AND COAL DEAL
Senator Culberson of Texas recently in
troduced a resolution calling on the attorney
general to state whether he had brought an
action against the steel trust because of its
accusation of the Tennessee Iron and Coal
company. On January 6 Mr. Roosevelt sent to
the senate a special message relating to this
subject. Commenting on the attorney general's
letter the president says:
"As to the transaction in question, I was
personally cognizant of and responsible for its
every detail. For the information of the senate
I transmit a copy of a letter sent by me to the
attorney general on, November 4, 1907, as
follows:
" 'My Dear Attorney General: Judge E. H.
Gary and Mr. H. C. Frlck, on behalf of the steel
corporation have just called upon me. They
state that there is a certain business firm (the
name of which I have not been told, but which
is of real importance in New York business
circles) which will undoubtedly fall this week
if help is not given. Among its assets are a
majority of the securities of the Tennessee Coal
and Iron company. Application has been urgent
ly made to the steel corporation to purchase this
stock as the only means of avoiding a failure.
Judge Gary and Mr, Frlck Informed me that as
a mere business transaction they do not care
to purchase the stock, that .under ordinary cir
cumstances they would not consider purchas
ing the stock, but little benefit will come to the
steel corporation from the purchase, that they
are aware that the purchase will be used as1 a
handle for attack on them on the ground that
they are endeavoring to secure a monopoly of
the business and prevent competition not that
this would represent what could honestly be
said, but what might recklessly and untruthfully
be said.
" 'They inform me that as a matter of fact
the policy of the company has been to decline
to acquire moro than sixty per cent of the steel
properties and that this has been persevered In
for several years past, with the object of pre
venting these accusations and as a matter of
fact their proportion of steel properties has
slightly decreased, so that it is below this sixty
per cent, and the acquisition of the property in
question will not raise it above sixty per cent.
But they feel that it Is Immensely to their in
terest, as to the interest of every responsible
business man, to try to prevent a panic and
goneral industrial smashup at this time and
that they are willing to go into this transaction,
which - they would not otherwise go into be
cause it seems the opinion of those best fitted
to express judgment in New York that it will
bo an important factor In preventing a break
that might bo ruinous and that had been urged
upon them by the combination of the most re
sponsible bankers of New York who are now
thus engorged in endeavoring to save the situa
tion, but they asserted they did not wish to do
this if I stated that it ought not to bo done. I
answered (hat whilo, of course, I could not ad
vise them to take the action proposed, I felt
it no public duty of mine to interpose an ob
jection. Sincerely yours,
" 'THEODORE ROOSEVELT.
" 'Hon. Charles J. Bonaparte,
" 'Attorney General.'
"After sending this letter I was advised orally
by the attorney general that, in his opinion, no
sufficient ground existed for legal proceedings
against the steel corporation and that the sit
uation had in no way been changed by its acqui
sition of the Tennessee Coal and Iron company.
-"X have thus given to the senate all the in
formation in the possession of the executive de
partments which appears to mo to be material
or relevant on the subject of the resolution. I
feel bound, however, too add, that I have in
structed the attorney goneral not to respond to
that portion of the resolution which calls for a
statement of his reasons for non-action. I have
done so because I do not conceive it to be with
in the authority of the senate to give directions
of this character to the head of an executive
department or' to demand from him reasons for
his action. Heads of the executive departments
are subject to the constitution and to the laws
passed by congress in pursuance of the consti
tution and to the directions of the president of
the United States, but no other direction
whatever.
"THEODORE ROOSEVELT.
"The White House, January 6, 1909."
THE GnOST OP THE OLD YEAR
He was dreaming of the New Year resolutions
he would make
And frame in costly fashion too beautiful to
break;
But "Who are you?" he shouted, as he rose
from troubled sleep,
And saw an awful shadow from a chilly corner
creep.
"I'm the ghost," the shadow answered, inthe
iron tones of Fate,
"Of the New Year resolution that you made
- in 1908!
"You see me how I'm limping? How the light
of life I lack?
You let me fall :remember?--and the tumble
broke my back!
You mended me you patched mo here and
there, while seasons fled,
But I'm armless, and I'm legless and like you,
I lost my head!"
Then the New Year resolutlonist he. wept .him
bitter tears
As he thought of him as only one of wrecks of
ruined years;
And he waltzed toward, the sideboard, where
decanters met his viewr
With "For old times' sake, old fellow, here's
a New Year health to you!"
Frank L. Stanton in Atlanta-Constitution."
SALEM LJBRABY
Mayor J. H. Vawter, of the city of Salem,
Marion county, Illinois, the ex-offlclo president
of the library board, announces that the Bryan
Bennett library, built upon the site of Mr.
Bryan's birthplace, is now completed and ready
to receive books. Any person desiring to make
a contribution of books or newspapers will please
communicate with Mayor -Vawter,
&hvVU v bk ' V
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