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The Commoner;
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EDUCATIONAL SERIES
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Guaranteed Bank Deposits in Oklahoma ""''
, St. Louis, Mo., October 18, 1909. Editor
The Commoner: There is aa impression abroad
that the recent Oklahoma bank failure demon
strated tho -weakness of the guaranteed bank
deposits law. My conviction is tho reverse.
Can't you give us a series of articles showing
its beneficial effect?
R. B. HAUGHTON.
Govornor Haskell's letter on this very subject
to tho editor of tho Wall Street Journal will
answer Mr. Haugh ton's question:
Guthrie, Okla., October 11, 1909. Editor
Wall Street Journal, New York City, N. Y.
Sir: In your issue of October 1, referring to .
tho closing of tho Columbia Bank and Trust
Company of Oklahoma City by our state board,
I extract the following:
''The bank is confronted with the necessity
of paying its depositors in full, irrespective of
the indebtedness of the depositors to the bank,
and to do so it is necessary to call upon the
other banks of Oklahoma, who do not show
that alacrity in paying up that Governor Has
kell would doubtless like."
Tho above statement is false. Depositors are
paid only the balance of their account after
deducting their Indebtedness to the bank, which
Is the same as a solvent operating bank would
do. The state bankers pay assessments prompt
ly on sight draft.
Again you say:
"It has been said in these columns before
that the guaranty of1 bank deposits is either a
premium on bad banking or a humbug. In
Oklahoma it is a premium on bad banking. The
suspended institution actually had on deposit
one-sixth of the guaranty fund," etc.
Oklahoma has over Bix hundred state banks.
Our .'present banking law was passe" d tw .yejars
ago next December, during which time we had
a small bank failure in May, 1908. The credi
tors were all paid within forty-eight hours. The
draft on tho guaranty fund was replaced within
five weeks, and within seven weeks the stock
holders had fifty-five cents on the dollar on their
stock, and thus that incident was closed.
The closing of the Columbia' Bank and Trust
Company took place on September 29 this year.
Immediate payment was, began, and every claim
presented and sworn to was paid in the order
in which it has been presented during the ten
banking days that have ensued, and the Co
lumbia Bank and Trust Company, under charge
of the Btate banking board and commissioner,
has been open regular banking hours or longer
every, day, and will so continue to the end.
-That gives you two bank failures in twenty-two
. months.
Now kindly advise me on what theory you
claim that the Oklahoma' banking law is a hum
bug, and promotes bad banking? Have you got
any record anywhere else where out of over
six hundred banks you have less than one fail
ure per year? If you are analyzing banking for
the purpose of finding reckless bankers or hum-
bugs, I beg that you will begin by explaining
the Walsh failure in Chicago and the Bigelow
failure and dozens of others within the shadow
of your own printing office, where a bank fail
ure means a riot on the street, a locking up of
patrons' funds, a depression of business, and
wide-spread disaster throughout the entire
sphere of influence of your failed institution,
,' The examples to which I might refer under
your present national banking .Jaw (which Aa
a relld of barbarism, grown stale with age, and
proven inefficient by a hundred examples), is
certainly not a model that you would recom
mend to tho state of Qklanoma or any other
state or nation.
Your reference to a portion of the guaranty
fund being on deposit In this bank was either
purposely or ignorantly unfair, and ignorance
of the facts does not excuse an editor who takes
the freedom of discussing a question of fact.
You should have told your readers the truth,
that what guaranty fund there was on deposit
in this bank, In compliance with our law, had
its legal protection which enabled us to con
vert it into cash in six hours.
'Again you say:
"A bank which needs a guaranty has no title
to bo in business at all."
This is unworthy of space fpr answer further
than tp ask your readers to reflect on the mis
erable failures that have occurred under the
national law you have attempted to sustain.
Again you state:
"A dishonest director, exercising the neces
sary power on the finance committee, could
discount his worthless note of hand, maturing
a year ahead, with his bank, credit his deposit,
account with tho amount, suspend the bank and
receive in full tho amount of his fictitious de
posit from tho other banks,"
Now, Mr, Editor, under separate cover I am,
sending you a copy of the Oklahoma bank law.
No such condition could bo accomplished under,
our law. You have simply been reading the
national banking law and have gotten our state
law mixed in your mind by comparison.
Of course, men can rob a guaranteed bank
just as they can rob any other clasB of property,
but under the Oklahoma law they have to do
it on very short notice to even get started away
with tho goods.
Your general statement that the Oklahoma
law encourages weak banking, I would ask you
to advise yourself. There are a class of people,
among whom there may be some editors, who
form the habit of speaking first and thinking1
afterwards. This is a bad practice. You should
quit it. You will discredit your newspaper.
There haB never been a quarterly report since
the Oklahoma law was passed that does not
show conclusively that the state banks of Okla
homa are stronger than any other class of banks
in the state. I do not mean to say that the
other class of banks are not sufficiently strong,
but I do mean to say that the Oklahoma state
banks are exceptionally strong.
..In your issue of October 7, you have the
following: '-"
nfrnfrnfnir,
ksw m.q v UV WA. WV WU1VVU UtUdWO VVUA j tlt
tine: at GUthrle. in feirard ttf nftVihi tifcnbsitork
of the failed Columbia bank, may in the end
acquire a very wholesome respect for the fed
eral court. Disobeying an order of the United
States court is dangerous,"
r You have obviously copied this paragraph
from the petition filed in the United States court
and the motion for citation in the case referred
to. There is no other source from which you
could have acquired any such statement of fact.
In the first place ;the attorneys who 'brought
the suit are the same, attorneys who have the
case pending in the United States supremo court,
appealed from our state court to destroy the
state banking law. They secured a client, non
resident of our state, with a twenty-five. thou
sand dollar certificate of deposit on the Cb
lumbla Bank and Trust Company. Protest
against the payment of this certificate had been
filed with me. We asked the holder to verify
the genuineness of his claim under oath. His
counsel did not see fit to do this, but proceeded
to Guthrie and instituted their case not for
the purpose of getting their money, but for the
purpose of discrediting the law, a sentiment
which imagination might attribute to you, but
which we hope in your case does not exist.
Learning that this action was contemplated,
our attorney telegraphed the federal judge, ask
ing a hearing in case any application was made
to him. We feel that the governor of a state
in the discharge of an official duty, particularly
of this character, where great public injury
might result, should have been accorded 'the
courtesy of a' conference. It was not given. The
court issued not such a restraining order as
you Indicate, but a limited order,- solely at
tempting to restrain the state authorities" from
treating, different creditors, "unequally."' In
, asmuch as there had been no unequal treat
ment, the restraining order covering nothing
that was not already being practiced by us,
and again our attorney, at 9 o'clock that morn
ing, was before the judge with the full, amount
of the plaintiff's claim in cash to, deposit in
tho hands of the clerk of the court, Bubject
to tho final finding of the federal judge as to
the merits of tho plaintiff's claim.
I do not expect tp induce you to concede that
the authorities of ,the state of Oklahoma have
any rights whatever. We have come to know
that you and the element in which you circu
late can not accomplish your ordinary .purpose
in life through the instrumentality of govern-
; VOLUME 9, NU"MBEH 44
mental machinery sOlected by the people, and
therefore, your readiness to condemn us but t
beg to assur5 you of one thing: I am proud of
my record as' a public official for nearly throe
years in Oklahoma. The people of Oklahoma
aTe satisfied and the fact that the Wall Street
Journal persistently condemns me is a sou mi
of great satisfaction to me.
There i but one thing ..to. add;, theorize all
you will about the virtue of the national bank
ing law; criticise all you like about the noliev
of the Oklahoma banking law, but the fact re
mains that in Oklahoma state banks, creditors
can get. their money any day on1 demand in
a failed national bank lip can't get his money
anywhere in the union short of several months
and in "many Instances in several years, and
then usually in such small partial payments as to
be the equivalent only of ordinary interest per
annum on his deposits, with no hopes of ever
getting the principal.
Oklahoma can handle a failed bank without
the slightest disorder on the street or in the
bank; policemen are not required to preserve
order. Local business is not suspended by the
tieing up of bank funds. We need no antidote
for fever throughout the ' state on such oc
casions. You are not entitled to criticise the Oklahoma
law' until you' can show that the law you favor
produces equally commendable results.
'" ! Very truly yours,
C. N. HASltELL,
Governor.
4
CONGRESSMAN. HARDY'S SPEECH
Congressman Hardy's speech, published in a
recent issUe'of Thef Commoner, will have a largo
circulation It is a; very clear and forceful
elucidation1 of a number of points involved in,
the controversy over free raw material. The
arguments which he presents are not only un
answerable,1 but they illustrate the situation so
plainly that no disinterested person can fail to
recognize' the 'necessity for .free importation of
those raw materials which lie at the foundation
of our principal industries "' He very properly
emphasizes the fundamental proposition that a
tax on raw material ia really ai tax upon tho
eonsujner of the article a&d npt upon the man
ufacturer. This. is a; fact: which is always over
looked, by those protectionist deniocrats who are
demanding a itax on raw material The manu
facturer not only cqllects all the tax that he
pays to the. producer of raw material but a great
deal more, for the consuiner at last reimburses
him in an, overflowing measure. Free raw ma
terial is in the interest of the consumer, not in
the Interest. -of the manufacturer, and when the
deniocrats pf Texas get this ;fact clearly before
th,em they, will receive in. silence, if not with
active disapprobation, the arguments of those
who are trying to extend protection to a few
producers. , of- raw material, such as the sheep
owners and. the saw mill menp
rn
"PARTY SOLIDARITY
.Referring to the effect ot President Taft's
appeal for rarty solidarity, William Allen White
writing in tho Emporia (Kan.)' Gazette, says:
"There Is not in the west a,, free newspaper
that has even flickered fpr a ,minute. Hundreds
of papers that have been unswerving in their
admiration and loyalty to the president are sad
dened at his fearful mistake; but they are
even more earnest in thejr. advocacy of their
Ideas than, before. The insurgent congressmen
and senators have not jost, a -supporter, lap
people still are behind these 'men. The presi
dential, rebuke has made thm more heroic in
the eyes of .their, friends.'.' ,.
M-
v VISIONS OFBOYLAND
W;iia,do!es a Uttle boy .dream about
..All through his laughing'jA years,
.Are his casfles, really .safarhfn Spain
. ...nq buht.by the hapd,;pffeors,
Where only kings and .qpe'en command
From gilded chairs the realm
And golden coins twinkjfy $ow,n
Tp tb.e thin wayfarer's hand 1
No, no a, little boy drearqs about
The vflish .in the creek near, .by,
The .trap he lays at th,q muskrat house
And the rabbits hopping,,shy.
A wi.Uovf, stick Is his scepter,
A stuhi-bjado knife the; key , .
That fits'. eaclr door of fancy- .. -. .
And sets his dream folk$ reo. Jt
wilSl clnaniberlain in e'rmiillonr S. D
Republican. . ,. y
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ry
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