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The Commoner.
VOLUME 11, NUMBER It
16
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GUARANTEE OF BANK DEPOSITS
Figures presented by Comptroller
Murray, as summarized by tho secre
tary of tho fodoral treasury, develop
tho Interesting fact that tho national
banking systom has suffered serious
losses in membership in thrco states
whoro laws aro In full operation
guaranteeing deposits in tho stato
banks. Of 120 national banks which
woro placod in voluntary liquidation
during tho past year, 44 wore in tho
deposit guaranty states of Kansas,
Texas and Oklahoma. Of the nhio
banks which liquidated In the state
of Kansas, six wero succeeded by
stato institutions; in Texas, out of
slxtoon liquidations, eight banks
wore succeeded by stato institutions;
and in Oklahoma, out of nineteen
banks which liquidated, thirteen
woro succeeded by stato banks.
This showing causes tho Wall
Street Journal to thus comment:
"When it is considered how clumsy
and unscientific aro somo of tho do
tails of tho stato guaranty laws, and
how offectivo has beon tho supervi
sion exercised over national banks in
rocont years, it is rather surprising
that tho tendencies of tho stato guar
anty laws seem to havo beon so in
fluential in attracting deposits and
business to tho stato banks and mili
tating against tho business of tho
national banks. During tho past
year only throo national banks actu
ally failed, with aggregate capital of
$250,000 and aggrogato liabilities,
oxclusivo of circulation, of $1,166,
019. Tho latter amount represents
little more than one-fiftieth of ono
per cont of tho individual deposits of
all national banks and only a trifle
moro than one-hundredth of ono per
cont of total liabilities. In other
words, if tho national banks had been
assessed for a sum sufilciont to meet
tho entire liabilities of tho three
fallod banks, without a cent reallzod
from their assets, the contribution
of a bank with assets of $1,000,000
would havo beon a llttlo more than
$100.
"Thoro is some reason, from in
spection of tho record of failures and
liquidations during the history of tho
national banking system, to conclude
that the tondency towards losses has
boen steadily minimized in recent
years, independent to somo extent of
financial conditions. Tho figures for
' tho forty-fivo yearsNending with 1909
show that the total collections from
the assets of insolvent national
banks exceeded tho amount of claims
proved. Tho claims proved were
$179,280,953 and the collections
from all sources were $187,945,-
871."
Tho Journal parsimoniously ad
mits, however, that "not all of tho
collections wont in dividends to de
positors, because certain loans and
tho expenses of liquidation had to
be paid." Many persons, who were
depositors in failed national banks
know to their Lorrow how true that
Btatement Is, and their losses have
brought them an understanding aB
to why bank receiverships are bo
eagerly sought by thrifty individuals.
Oklahoma has had its experience in
this connection.
Nevertheless, it is very Interesting
to find tho Wall Street Journal ad
mitting, although grudgingly and
somewhat indirectly, that the prin
ciple which Mr. Bryan caused tho
democratic party to indorse is a good
ono. Depositors in failed banks
operating under tho guarantee of de
posits plan havo invariably been re
turned the money they had on de
posit, dollar for dollar, and that is
a' fact which cannot bo evaded. It
is also the important fact in con
nection with the plan as viewed by
depositors.
It may bo admitted that somo of
the details of the guaranty plan are
"clumsy and unscientific," for many
laws havo been enacted which, al
though correct as to general prin
ciples, have beon somewhat defective
in somo of their dotall. It has not
boon claimed that tho guaranty plan,
so far aB developed, is perfect in
detail, but is main features, as oper
ative in Oklahoma, at leaBt, are
right. They really protect tho de
positors, which is tho reason, as tho
Journal remarks, "for the flight of
depositors to tho state banks where
tho guaranty law prevails, because
they believe that they can get their
deposits back without regard to tho
quality of tho management of tho
bank."
While the Journal contends that
tho method of tho stato guaranty
laws is subject to grave criticism
and has not been genuinely tested, it
novortholosa suggests that, "if tho
national banks could co-operate in
somo way to protect depositors by a:
systom which puts a premium upon
sound, instead of unsound banking,
tho great prestige of tho national
system ought to enable them to hold
their ground easily against the state
banks."
Bank depositors in general will not
dissent from that opinion; nor will
tho democratic party; nor will Mr.
Bryan. It is tho very thing the peo
ple want, and which Mr. Bryan sug
gested, and for which tho demo
cratic party pleaded. A bank de
posit guaranty plan under any other
namo should operate just as bene
ficently. Oklahoma City Oklaho-man.
AGAINST FORTIFYING OANAIi
The American Peace Society, with
headquarters at 31 Beacon Street,
Boston, is opposing fortification of
tho canal, for tho following reasons:
Neutralization means mutual agree
ment among nations that a specified
region shall bo always neutral in a
war between other states and that
its own immunity from attack or
from warlike action of belligerents
bo guaranteed.
1. Becauso the canal would be
safer in wartime without fortifica
tion. According to tho agreement
signed by The Hague conference in
1907, unfortified coast places cannot
bo bombarded.
2. Because the original intention
of our government, as distinctly ex
pressed in 1900, and previously, was
to prohibit fortifications on tho canal.
Though this prohibition was omitted
in the finally revised Hay-Paunce-fote
treaty, signed in 1902, this in
no wise implies that wo ought to
rortiry it, nor was its construction
proposed aB primarily a military
I undertaking.
3. Because,-though the Suez canal
was built with English money, Eng
land agreed to its neutralization.
The Straits of Magellan aro also
neutralized and tho Interparliamen
tary Union, in 1910, declared in
favor of the neutralization of all in
teroceanlc waterways.
4. Because tho Unlttd States in
all ita history has never been at
tacked and began every foreign war
It ever had and is too important a
customer for any great nation at
iniB iato day to wantonlv attarv
Though an enemy might in stress of
war bo tempted to break its pledge
with us, no nation would dare break
its neutralization pledge with tho
combined powers, as tho tjenaltv of
non-intercourso, which could be in
cluded In the general treaty, would
involve commercial ruin.
5. Because, with the experience
of nearly a century's peace with Eng
land, ensured by our undefended
Canadian border ln&, until we have
asked for complete arbitration treav
ties with all possible future anamU-z
and have been refused, v& Mould
be Insincere fn Incrtaxlng out wr
measures. Thiz fa nw'lii ,
in view of the facte that, tUieA 102,
the nations have signed on& hnnAttA
arbitration treaties ad Vtmtotsat
raft has made the Jratrfcwrfy 6
laration that he b&& no itzzju yrtty
any question whatever should not
bo arbitrated; that the second Hague
conference in various ways di
minished tho likelihood of war; that
not only the prize court but the
court of arbitral justice is practi
cally assured; and that in the sum
mer of 1910, congress unanimously
passed a resolution asking the presi
dent to appoint a commission of five
to consider the utilization of exist
ing agencies to limit the armaments
of tho world by mutual agreement
of tho nations and to constitute the
world navies "an international force
for tho preservation of universal
peaco and to consider other means
to diminish expenditures for mili
tary purposes."
6. Because, in the words of Hon.
David J. Foster, chairman of the
committee of foreign affairs in the
house of representatives: "The ini
tial expense of the necessary fortifi
cations would not be less than
$25,000,000; in all probability it
would not bo less than $50,000,000.
Tho annual expense .of maintaining
such fortifications 2,000 miles from
home . would probably amount to
$5,000,000. With all the fortifi
cations possible, it is still apparent
that in order that the canal might
be of military advantage to the
United States in time of war a
guard of battleships at each of its
entrances would bo an absolute ne
cessity. It is equally apparent that
with such a guard the fortifications
would be unnecessary, if not entirely
useless. We are bound by solemn
treaty obligations to see to it that
the canal shall be and remain for
ever open to British ships in time
of war as well as in time of peace,
and while it is probably true that
no other nation could claim any ad
vantage by virtue of this treaty, it
is also true that we have thereby
placed ourselves under moral obliga
tion to maintain an open canal for
tho ships of all nations at all times,
in war as well as in peace."
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