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The Commoner..
VOLUME 9, SUMBER-
7 - '
"4
GOVERNOR SHALLENBERGER'S
m.
- .r
An Important Document, Particularly That Bearing
on Guaranteed Bank Deposits and the Primary Law
it
Jlll(Wf1"l,,W",,l"
m mm I l K r 1 H
VI H .SSZ1. -H
1 Tll-JMky XVU 4
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The first message of Ashton C. Shallonborgor,
NobniBka'B domocrntlc governor, was particu
larly, Intorostlng.
Governor Shallonborgor promised on his own
bohalf, and urged the democratic legislature to
do llkowlso, ovory offort for tho redemption of
all pledges made to tho people. Ho urged a
chango In the rovonuo law to tho end that the
pooplo oloct precinct assessors, also that tho
arbitrary powors given by oxlsting law to tho
state board of equalization and assessment bo
-modlflod "so that tho people shall have restored
to them some volco In determining tho amount
,,yl ni.vvio biiujr ouiwi uu UIMUJJUIIUU IU VLJ Wt BUJJ-
port tho state government." Ho urged tho pas
sago of tho law authorizing tho state railroad
commission to appraiso tho physical value of
public sorvico corporations and to control their
debt croating power. Ho suggcstod that the
state institutions bo placed in tho charge of a
non-partisan board to bo appointed by tho gov
ernment. Ho advocatod homo rule for tho cities
of Oiunha nnd South Ohiaha.
PMMAItY LAW
On tho subjoct of primary law Governor
Shallonborgor said:
Our prosont primary law is unsatisfactory and
unfair in many of its provisions. Tho expense
to tho stato In holding a state wide primary is
onormous, and unless tho election results in
rogtetorijg tho will of tho party majority of
,thoso voting and placing- bettor candidates be
foro tho pooplo than the convention method,
tho benefits of tho law can not bo said to war
rant its cost. Under tho present law, tho acci
dental alphabetical position of tho candidates
named upon tho ballot is at times more potent
In obtaining nominations than merit or ability
The number of names required upon tho petition
or a candidate for a stato ofllco, is grossly in
sufficient. Tho cost of elections, both to the
candidates and tho stato is greatly increased. It
s doubtful if tho averages olector will over have
i? fli.n?iUi Pod aca,!nlntnnco with tho long list
of candidates for tho different offices upon tho
S n a,stato wide primary to insure intelli
gent selection. I would suggest to you a county
lliaV t0 mlimt0 county officers and dele
gates to a state convention. The state conven
tion to solect two or more namos for each ofllco
to go upon tho primary ballot and to make tho
party platform, which ought to be issued in
advance of tho primary instead of subsequent
as at present. Tho plan of the present law for
organizing the party machinery is not particu-
VL?tCltt0a V,produce g00(1 sults,Pnor is
in ?i ? Is I)rovIs ons t0 tho different counties.
In tho last analysis no law can be consIderiS
sa sfactory unless it accomplishes the hings
which it was framed to do, and I can not believo
to present primary law has public approval
judged by this standard. It should elthe? bo
amended materially in its provisions or repealed!
GUARANTIED BANK DEPOSITS
S!1!01 Shallonborgor dovoted a large por
tion of his message to guaranteed bank deposits
ho chief issue upon which ho was elected On
that subjoct tho governor said: ect0J' 0n
Andrew Carnegie has said: "America hm i
worst banking system in tho woriaS i soS?cS?
think tho facts warrant such a statement bit
will venture tho opinion that wo havo not the
best system that it is possible for us to obtain
and nothing but the best should bo good onouih
for tho people of Nebraska. Our present hiw is
very much in advance in all that po?ta1n7 to
safe and proper banking to tho law which IrZ
ceded it. No ono will venture to Mint J th
tho ono now in force is perfect, therefore w
are warranted In asking for still further in?
provomont. Tho primary nurnoVn U .. ,
HBhment of banks so Z Pas Z pfibl cis cSn"
corned is first that the people should inJL
safe place to dnnnRt hJ,. filouId. have
that thoso who need it may convlfnn SlSw0I!d
funds upon proper securit toTSe Sow ehafi
Xra?ieonn.eathdred t0gGtl- tTffiSE
Tho ideal systom of bankinc will mm-Kimf,
jdmoalton tho absolute wtatatToftt?"
fef ovorv riniinv ircfo , i... :.." return
batVt. ,,,:1: """ Vus insure the
nation should see to it that every safeguard shall
bo used to provido for tho security of the de
positor since they permit and authorize the re
ceiving of deposits under the sanction of a char
ter granted by tho state.
Recognizing this implied obligation the state
has already provided in many ways by useful
laws for the insurance and guaranty of the funds
of depositors who place their money in banks
operated under its laws.
From time to time these guaranties have been
increased until losses to depositors are rare in
deed. Tho report of tho comptroller of the cur
rency for 1908 shows that a tax of one-twenty-sixth
of ono per cent levied upon the deposits
in national banks during tho forty-five years
that that system has been in existence would
have raised a sufficient sum so that no persons,
who had trusted their money to a national bank,
would have lost a cent.
A study of tho figures of our own state bank
ing department shows even a more satisfactory
condition. Only during tho last eight years, has
the law provided for a complete report from re
ceivers of failed banks. During this period a
tax of less than one-thirtieth of one per cent
levied upon the deposits in our state banks
would have raised a sum sufficient to have in
sured every depositor against any possible loss.
With these facts before us, I do not hesitate
to say that it is a reflection upon our American
civilization and business methods to longer fail
to provido an insurance guaranty fund and
banking law, which will make every dollar de
posited in a Nebraska bank absolutely sure of
being returned to its lawful owner when it shall
be demanded. Certain deposits are now secured
in stato and national banks by safeguards in
addition to the guaranties which the law exacts
of tho banker to protect his Individual depositor,
rho county, state and the nation having found
by experience that tho securities which tho law
provides for the ordinary depositor are at times
insufficient and therefore require that the banks
snail at their own expense deposit bonds as ad
ditional security to protect them against any
possibility of loss. There can be no rule of busi
ness ethics which makes it just to secure the
state and the nation and deny the same protec
t on to the Individual depositor. The only ques
tion for you to decide, it seems to me, is as to
,,? no the PrPsed additional guaranty
fund that can be credited with the certainty that
in? L nroYide absolute security to tho depositor
Snifv ?.l P aS? aun 1nfalp burden an responsi
bility upon the banker.
1 believe that the desired security can be ob
tained by levying a light tax upon the capital
stock of each bank transacting business under
our la-ws, thus providing a guaranty fund to
pay promptly any possible loss to a depositor by
reason of tho failure of a state bank. The
amount of such tax to be a certain per cent of
the average deposits as shown by the rlSorts
of the department of banking and payment to
The votmo' o'f PerIdS and t0T a todSSlnt
iiio volume of money .supposed to be in cir
culation in the United States on October 1 1908
according to the latest report of the natloimi
banking department, wai ? "a&MO F Less
than one-half of this enormous sum & ; accounted
for by reporting banks of every descHpUon or
?S ?S de.p0uBlt In the natinal treasury I Not one
tenth of that portion which is unaccounted fS
is serving any useful purpose in the econom I '
of modern business methods. If one-ha?f of
It were returned to the banks it would enor
mously expand the business and wealth of 5
state and nation and raise the hfmvint J u
of the United StatesntUit ould SSfedttS
e
thing of the past, I believe a gVeat llxX l
direction will have been acconSSshedf
Tho reports of the comptroller of ti, n
rency and of our own dSZt of ti?r"
furnish us with data wffi sW us that h-
have been allowed. Four hundred and one
insolvent national banks have been liquidated,
and the receivers discharged. There nas been
-i oo -i on o-io n.i--i xi i - -.
fAOd,AOi,OXO CUIJICULUU II OiU LUG UBStilS BUU
stockholders' liability pf these failed institutions,
or more than 100 per cent of depositors' claims.
The expenses of liquidation and the payment of
claims, other than those of depositors, has re
duced the amount collected until only aoout
seventy-five "per cent of the amount due deposi
tors has actually been returned to them. In
later years, nnder better conditions, this per
centage of loss has been greatly reduced. Four
teen national banks became insolvent during
1903 and have been liquidated and ninety-nine
per cent of their deposits have been returned to
their creditors.
Since 1900 our state department of banking"
has a complete record showing the result of re
ceiverships of insolvent state banks. This record
shows that a total deposit of $515,264.24 has
been placed in jeopardy by reason of the failure
of state banks during this period. From the
assets of these insolvent institutions depositors
claims have been liquidated until the balance
unpaid for the entire period of eight years is
$198,255.23, or an average annual loss of about
$26,000 to depositors. Creditable as this show
ing is, I feel quite certain that with a number
of improvements which can be made in our
present law, the percentage of loss can still be
materially reduced. The minimum capital re
aJ? A lor the incorporation of a state bank
should be increased to at least $15,000. Bank
examinations should be made twice a1 year in-
Beadi, once, as now required. Examiners
should be assigned to a certain territory and
thus eventually would become familiar with
conditions and securities in that locality and
would acquire the necessary, knowledge as to
Sfmw,11 f th bllls livable of the banks
h?i ?Jheywould examIne. which is the essen
tial thing in determining the solvency of any
banking corporation. y
Under a guaranty plan which would make
the banks of the state sustain the losses of thl
entire system, the bankers should be given a
share in the control of the department The
present banking board, which is composed of
three officers elected for an enUreldiffereSt
purpose, should be abolished and a nonpartisan
board established to be composed of three mem
bers appointed by the governor, each f o? SK
members to have had at least five years' pLti-
SlinTPhenCeIn,,)llnWl,e and at "art two o
them to be actively engaged in thatusiness at
the time of their appointment. A bkk commis
sioner should be appointed by the governwia
the approval of the banking board who should
have had an experience in the banking buBinesa"
equivalent to that required of a member of thl
laws. It has beeh urged by critics S J
be a serious obiprHnn o,,,, inis would
so alluring that at times thiPe? thereon ia
increase more rapidly than thnUmbeJ 0f banks
ness require with coLwJiEJ neds of budi
ardous risks, extravaS in J?vSoad,n' haz"
Penses, with the TrS ?LthulASnBB and
issuance of chartern tftp, BUffer The over
overcome by leased m,11 a gr.eat measure
amount of capita? StockS2ilementp as to the
in by the stqckholdes beZTy, to,be paid
issue. The amount L,fie a chw0P shall
should bear a p?onor 52?i ln each instance
tion of the towir
effect the nnSolTSSSn
'
"$
inkrrnr fir:;ur" .a 'oan9Io in
i "" "uuu U1 "uwuess. Tne state and
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