17336. Costan Liopea (Cleveland, OH)

Bank Information

Episode Type
Run → Suspension → Closure
Bank Type
state
Start Date
August 1, 1908*
Location
Cleveland, Ohio (41.499, -81.695)

Metadata

Model
gpt-5-mini
Short Digest
4266678d

Response Measures

Full suspension

Other: Multiple syndicated newspaper editorials refer to a reported failure of the Cleveland bank 'Costan Liopea' and describe a crowd storming the closed banking house; no reopening reports found.

Description

Multiple syndicated newspaper items (Aug 1908) report a bank failure in Cleveland described as the busted banking house of Costan Liopea with a large angry crowd storming the closed doors. OCR of the name looks uncertain; I retain the provided form but flag uncertainty. The accounts describe a run/riot at the closed bank and state the bank failed; no reopening is mentioned.

Events (2)
1. August 1, 1908* Run
Cause
Bank Specific Adverse Info
Cause Details
Newspapers describe the bank as having failed (busted banking house), which triggered depositor anger and a crowd storming the closed doors.
Newspaper Excerpt
Twelve hundred infuriated Italians stormed the closed doors of the busted banking house of Costan Liopea on Orange street, today. The police drove the crowd back.
Source
newspapers
2. August 1, 1908* Suspension
Cause
Bank Specific Adverse Info
Cause Details
Article language states the bank 'failed' (insolvency/closure) rather than indicating rumor or regulator action; the bank was closed and crowd responded. No mention of reopening or receivership details in these excerpts.
Newspaper Excerpt
a bank failed in Cleveland, Ohio... the busted banking house of Costan Liopea
Source
newspapers

Newspaper Articles (10)
1. August 28, 1908 The Montgomery Advertiser Montgomery, AL
Article from The Montgomery Advertiser, August 28, 1908

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the past, because when banks become mutually responsible for each other's deposits they will be sufficiently interested in each other to favor better regulation and greater restrictions. What has Mr Taft done to protect depositors from and speculation? While he refuses to protect depositors he praises the AldrichVreeland law. which Invites specula. tion and stock jobbing In declaring that the system proposed by the Democrats would remove all safeguards against recklessness in banking, Mr Taft betrays an ignorance of the su3. ject for the plan does not propose the removal of any safeguards. In fact, contemplates stricter regulation of the banks and Oklahoma has already made the banking regulation strictHe declares that the only benefit would accrue to the speculator, who would be deligh ted to enter the bank ing business when it was certain that he could enjoy any profit that would accrue. while the risk would have to be assumed by his honest and hardfellow The working bank present ing law requires that certain amount of capital shall be invested in the busi ness, and that law would still stand, To enter the banking business therefore, a man would either have to have the capital himself or secure the con fidence of men who had the capital And this capital. together with the 100 per cent liability would be a guaranty that the stockholders would not intentionally select careless officials Why would 'speculator' be 'delighted to enter the banking business under the guaranty system? He is not relieved from pecuniary obligation nor he relieved from criminal liability He would have nothing to gain by carelessness nor would the stockhold ers have anything to gain by indif ference The chief cause of bank failures is the making of excessive loans to directors or officials of the bank This it is the fruitful cause of disaster and has been impossible to secure legisla tion protecting banks from their own officials and directors, Why? Be cause there has been no mutual responsibility When all banks become liable for the deposits of each. the stockholders will insist upon the en actment of a law making it criminal offense for a bank official to loan more than the prescribed amount to one Individual At present we have law prohibiting the loaning of more than one-tenth of the capital and surplus to one person or corporation. but the law is only directory. Of course the comptroller can suspend a bank if it violates the law but the law is not enforced because the enforcement of such a law would throw the punishment upon innocent stockholders and upon the community since the suspension of bank inflicts great loss upon stockholders and disturbs the business of the city or town in which the bank is located. The law should make it a criminal offense to loan more than the prescribed amount to one person and we would probably be able to secure the passage of a law prohibiting market speculation by bank officials. A The Oklahoma plan is better. bank recently failed in Oklahoma within forty eight minutes after the In notice of suspension the officer charge had authority to pay all depositors, and then the banking board proceeded to collect the assts of the bank and to prosecute the officials criminally When the business was a closed up, the stockholders passed resolution thanking the State Board for Its prompt action. the action of the Board being a protection to the stockholders as well as to the deposftors and to the public generally Compare this failure under the guar. antv system with a failure where there is no guaranty In Oklahoma the Bank Commissioner telephoned the farmers to come in and get their money, and the answer was. am busy today with my crop I will be in in a day or two In Cleveland. o a bank failed about the same time and the papers announced Twelve hundred 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 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 conservatively managed banks by or. fering a higher rate of interest than the latger could pay This objection is urged as if were an unanswerable one. But let usesee how easily it can be met. Since the law makes all or the banks liable for the obligations of each bank and in Oklahoma the banking board has already fixed the late of interest that can be paid to depositors According to the rules of the Banking Board no bank is permitted to pay more than three per cent on short time deposits or more than four per cent on time deposits running for six months or more It has also been urged as an objectton that under the guaranty system a big bank would have no advantage over a little bank Even if this argument were sound. it could not weigh against the advantages of the system, for banks are made for the people, not the people for the banks. While there are advantages in having big banka, the advantages are not sufficient to justify the jeopardizing of the depositor or of the business interests of a community But as a matter of fact. the hig bank would still have several advantages over the small one In the first place, It could make larger loans than ino small bank For instance a bank with $1,000,000 capital and surplus could, as present 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 the large bank the large deposits and the men doing business upon a large scale for deposits follow accommodations. Then, too, there is a certain business advantage in depositing with a big bank. It is worth someth to be able to refer to.a big bank when one's finan. clal standing is being vestigated, 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 advantage in being on good terms with the men who are prominent in the banking world. Surely the big bank's prestige will be worth enoug to It under the guaranty system: it should not begrudge the smaller banks the advant. age which the guaranty of deposits will bring to them. cannot pass from this subject with. out referring to the fact that the big

2. August 28, 1908 The Daily Sentinel Grand Junction, CO
Article from The Daily Sentinel, August 28, 1908

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corporation, but the law is only diOf can a rectory. suspend course, bank if the it violates comptroller the law. but the law is not enforced, because the enforcement of such a law would throw the punishment upon innocent stockholders and upon the community, since the suspension of a bank indicts a great loss upon stockholders and disturbs the business of the city or town in which the bank is located. "The law should make it a criminal offense to loan more than the prescribed amount to one person and we would probably be able to secure the passage of a law prohibiting market speculation by bank officials. "The Oklahoma plan is better. A bank recently failed in Oklahoma: within forty-eight minutes after the notice of suspension, the officer in charge had authority to pay all depositors. and then the banking board proceeded to collect the assets of the bank and to prosecute the officials criminally. When the business was closed up, the stockholders passed a resolution thanking the state board for its prompt action, the action of the board being a protection to the stockholders, as well as to the depositors and to the public generally. "Compare this failure under the guaranty system with a failure where there is no guaranty. In Oklahoma the bank commissioner telephoned the farmers to come in and get their money, and the answer was, 'I am busy.today with my crop; I will be in in a day or two.' In Cleveland, Ohio, a bank failed about the same time, and the papers announced 'Twelve hundred infuriated Italians stormed the closed doors of the busted banking house of Costan Liopea on Orange street, today. The police drove the crowd back.'

3. August 28, 1908 The Topeka State Journal Topeka, KS
Article from The Topeka State Journal, August 28, 1908

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their health. All insurance is open to the same objection, and yet insurance of all forms is growing, and the insurance of depositors is growing in popularity more rapidly than any other form of insurance-and, I may add, it yields the largest return on the investment. Mr. Taft complains that "no one can foresee the burden which under this system would be imposed upon the sound and conservative bankers of the country by this obligation to make good the losses caused by the reckless, speculative and dishonest men," etc. We have the past to guide us, and we have reason to believe that the loss will be less in the future than in the past, because when banks become mutually interested in each other's deposits they will be sufficiently interested in each other to favor better regulation and greater restrictions. What has Mr. Taft done to protect depositors from recklessness and speculation? While he refuses to protect depositors, he praises the AldrichVreeland law, which invites speculation and stock jobbing. In declaring that the system proposed by the Democrats "would remove all safeguards against recklessness in banking, Mr. Taft betrays an ignorance of the subject, for the plan does not propose the removal of any safeguards. In fact, it contemplates stricter regulations of the banks, and Oklahoma has already made the banking regulations stricter. He declares that "the only benefit would accrue to the speculator, who would be delighted to enter the banking business when it was certain that he could enjoy any profit that would accrue, while the risk would have to be assumed by his honest and hardworking fellow." The present banking law requires that a certain amount of capital shall be invested in the business, and that law would still stand. To enter the banking business, therefore, a man would either have to have the capital himself or secure the confidence of men who had the capital. And this capital, together with the 100 per cent liability, would De a guaranty that the stockholders would not intentionally select careless officials. Why would a "speculator" be "delighted to enter the banking business" under the guaranty system? He is not relieved from pecuniary obligation, nor is he relieved from criminal liability. He would have nothing to gain by carelessness, nor would the stockholders have anything to gain by indifference. Loans to Bank Officials. The chief cause of bank failures is the making of excessive loans to directors or officials of the bank. This is the fruitful cause of disaster and it has been impossible to secure legislation protecting banks from their own officials and directors. Why Because there has been no mutual responsibility. When all banks become liable for the deposits of each, the stockholders will insist upon the enactment of a law making it a criminal offense for a bank official to loan more than the prescribed amount to one individual. At present we have a law prohibiting the loaning of more than onetenth of the capital and surplus to one person or corporation, but the law is only directory. Of course, the comptroller can suspend a bank if It violates the law, but the law is not enforced, because the enforcement of such a law would throw the punishment upon innocent stockholders and upon the community, since the suspension of a bank inflicts a great loss upon stockholders and disturbs the business of the city or town in which the bank is located. The law should make It a criminal offense to loan more than the prescribed amount to one person and we would probably be able to secure the passage of a law prohibiting market peculation by bank officials. The Oklahoma plan is better. A bank recently failed in Oklahoma: within 48 minutes after the notice of suspension, the officer in charge had authority to pay all depositors, and then the banking board proceeded to collect the assets of the bank and to prosecute the officials criminally. When the business was closed up, the stockholders passed a resolution thanking the state board for its prompt action, the action of the board being a protection to the stockholders, as well as to the depositors and to the public generally. Compare this failure under the guaranty system with a failure where there is no guaranty. In Oklahoma the bank commissioner telephoned the farmers to come in and get their money, and the answer was, "I am busy today with my crop; I will be in in a day or two." In Cleveland. Ohio, a bank failed about the same time, and the papers announced "Twelve hundred infuriated Italians stormed the closed doors of the busted banking house of Costan Liopea on Orange street, today. The police drove the crowd back." Answers the Chief Objection. An objection is sometimes made to the 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 conservatively managed banks, by offering a higher rate of interest than the latter could pay. This objection is urged as if it were an unanswerable one. But let us see how easily It can be met. Since the law makes all of the banks liable for the obligations of each bank, the law should prohibit any abuse of this security by any bank. and in Oklahoma the banking board has already fixed the rate of interest that can be paid to depositors. According to the rules of the banking board, no bank is permitted to pay more than 3 per cent on short time deposits or more than 4 per cent on time deposits running for six months or more. It has also been urged as an objecticn that under the guaranty system a big bank would have no advantage over a little bank. Even if this argument were sound, it could not weigh against the advantages of the system, for banks are made for the people, not the peofor the banks While there

4. August 28, 1908 The Salt Lake Herald Salt Lake City, UT
Article from The Salt Lake Herald, August 28, 1908

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# A Striking Contrast. The Oklahoma plan is better. A bank recently failed in Oklahoma; within forty-eight minutes after the notice of suspension, the officer in charge had authority to pay all depositors, and then the banking board proceeded to collect the assets of the bank and to prosecute the officials criminally. When the business was closed up, the stockholders passed a resolution thanking the state board for its prompt action, the action of the board being a protection to the stockholders, as well as to the depositors and to the public generally. Compare this failure under the guaranty system with a failure where there is no guaranty. In Oklahoma the bank commissioner telephoned the farmers to come in and get their money, and the answer was, "I am busy with my crop; I will be in in a day or two." In Cleveland, O., a bank failed about the same time, and the papers announced "Twelve hundred 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 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 conservatively managed banks, by offering a higher rate of interest than the latter could pay. This objection is urged as if it were an unanswerable one. But let us see how easily it can be met. Since the law makes all of the banks liable for the obligations of each bank, the law should prohibit any abuse of this security by any bank, and in Oklahoma the banking board has already fixed the rate of interest that can be paid to depositors. According to the rules of the banking board, no bank is permitted to pay more than 3 per cent on short time deposits or more than 4 per cent on time deposits running for six months or more. # One of the Objections. It has also been urged as an objection that under the guaranty system a big bank would have no advantage over a little bank. Even if this argument were sound, it could not weigh against the advantages of the system, for banks are made for the people, not the people for the banks. While there are advantages in having big banks, the advantages are not sufficient to justify the jeopardizing of the depositor or of the business interests of a community. But, as a matter of fact, the big bank would still have several advantages over the small one. In the first place, it could make larger loans than the small bank. For instance, a bank with $1,000,000 capital and surplus could as at present 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 itself draw to the large bank the large deposits and the men doing business upon a large scale, for deposits follow accommodations. Then, too, there is a certain business advantage in depositing with a big bank. It is worth something to be able to refer to a big bank when one's financial 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 advantage 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 it under the guaranty system; it should not begrudge the smaller banks the advantage which the guaranty deposits will bring to them. I cannot pass from this subject without referring to the fact that the big bank needs the guaranty as well as the little one, for big banks fail as well as small banks, and the bigger the bank the greater the calamity to the community when it fails. No bank is so big as to be absolutely beyond danger and a community needs protection against the big bank's failure even more than against the failure of the small banks.

5. August 28, 1908 The Birmingham Age-Herald Birmingham, AL
Article from The Birmingham Age-Herald, August 28, 1908

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the removal of any safeguards. regulapropose it contemplates stricter In fact, of the banks, and Oklahoma has altions ready made the banking regulations stricter. declares that "the only benefit would be the speculator, who accrue enter the banking delighted He to to could would business enjoy when it was certain that he the profit that would accrue, while his any risk would have to be assumed by The honest and hard-working fellow. present banking law requires that invested a ceramount of capital shall be still tain and that law would in enter the banking man would either himself or stand. therefore, the business, To a secure business, have the to of men who had the capital. 100 together have And confidence this the capital. capital with guaranty the cent liability, would be a intenper that the stockholders would not tionally select careless officials. Why would a "speculator' be "delighted to enthe banking business" under the guarter anty system? He is not relieved from pecuntary obligation, nor is he relieved from criminal liability. He would have nothing gain by carelessness, nor would the by stockholders to have anything to gain indifference. Cause of Failures. The chief cause of bank failures is the making of excessive loans to directors or officials of the bank. This is the fruitful cause of disaster and it has been impossible to secure legislation protecting banks from their own officials and directors. Why? Because there has been no mutual responsibility. When all banks become liable for the deposits of each, the stock- of holders will. insist upon the enactment law making it a criminal offense for a a bank official to loan more than the pre- At scribed amount to one individual. we have a law prohibiting the of more than and surplus to one person capital loaning present one-tenth directory. or of cor- the poration, but the law is only Of course, the comptroller can suspend a bank if it violates the law, but the law of is enforced, because the enforcement such not a law would throw the punishment upon innocent stockholders and upon the community, since the suspension of a bank inflicts a great loss upon stockholders and disturbs the business of the city or town in which the bank is located. The law should make it a criminal offense to loan more than the prescribed to one person and we would be able to secure of law market amount probably a prohibiting the speculation passage by bank officials. bank plan is failed in 48 recently The Oklahoma Oklahoma; better. within A minutes after the notice of suspension, the officer in charge had authority to pay all deposits, and then the banking board proceeded to collect the assets of the bank and to prosecute the officials criminally. When the business was closed up, the stockholders passed a resolution thanking the state board for its prompt action, the action of the board being a protection to the stockholders, as well as to the deposiors and to the public generally. Comparison Plans. I Compare this failure under the guaranty e system with a failure where there is no In Oklahoma the bank comthe missioner guaranty. telephoned farmers to come in and get their money, and the answer was, "I am busy today with my crop; I will be in in a day or two." ) In Cleveland, Ohio, a bank failed about the same time and, the papers announced 1 "Twelve hundred infuriated Italians stormed the closed doors of the busted 8 banking house of Costan Liopea on Orange street, today. The police drove the crowd back." 3 e An objection is sometimes made to the 8 guaranty law that a "new bank would start across the being able its the guaranty security to up through promise street," depositors and, law, absolute could draw the deposits away from conservaa I tively managed banks, by offering a higher rate of interest than the latter g could pay. This objection is urged as if it were an unanswerable one. But let e us see how easily it can be met. Since the law makes all of the banks liable 0 for the obligations of each bank, the law k should prohibit abuse of this security bank, and in the board has rate banking by any any already Oklahoma fixed the that can be paid to deposito the no bank is pay tors. ing of interest board, According rules permitted of the to bankn more than three per cent. on short time deposits or more than four per cent. on time deposits running for six months or more. Banks for the People. It has also been urged as an objection n that under the guaranty system a big bank would have no advantage over a litd tletle bank. Even if this agrgument were y sound, it could not weigh against the advantages of the system, for banks are made for the people, not the people for the banks. While there are advantages in having big banks. the advantages are not sufficient to justify the jeopardizing n of the depositor or o the business interests of a community. But, as a matter of fact, the big bank would still have several advantages over the small one. In the first place, it could make larger loans than the small bank. For instance, a bank with $1,000,000 capiv tal and surplus could, as at present, loan $100,000 to one person, while a bank with $100,000 capital and surplus could only e loan $10,000 to one person. This advant+ n in itself draw to large e the and dobank age would large deposits the the men for t ing business upon a large scale, de-

6. October 1, 1908 Mexico Missouri Message Mexico, MO
Article from Mexico Missouri Message, October 1, 1908

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officials of the bank. This is the fruitful cause of disaster, and It has been impossible to secure legislation protectIng banks from their own officials and directors. Why? Because there has been no mutual responsibility. When all banks become liable for the deposits of each, the stockholders will insist upon the enactment of a law making it a criminal offense for a. bank official to loan more than the prescribed amount to one individual. At present we have a law prohibiting the loaning of more than one-tenth of the capital and surplus to one person or corporation, but the law is only directory Of course. the comptroller can suspend a bank If It violates the law, but the law is not enforced. because the enforcement of such a law would throw the punishment upon innocent stockholders and upon the community since the suspension of a bank infliets a great loss upon stockholders and disturbs the business of the cated, city or town in which the bank is loThe law should make It a. criminal offense to loan more than the prescribed amount to one person, and we would probably be able to secure the passage of a law prohibiting market speculation by bank officials. The Oklahoma plan is working satisfactorily. A bank recently failed in Oklahoma; within forty-eight minutes after the notice of suspension, the officer in charge had authority to pay all deposItors, and then the banking board proceeded to collect the assets of the bank and to prosecute the officials criminally. When the business was closed up, the stock holders passed a resolution thanking the state board for its prompt action, the action of the board being a protection to the stockholders, as well generally. as to the depositors and to the public Compare this failure under the guaranty system with a failure where there is no guaranty. In Oklahoma the bank commissioner telephoned the farmers to come in and get their money, and the answer was: am busy today with my crop: I will be in in a day or two." In Cleveland. Ohio, a bank failed about the same time, and the papers announced "twelve hundred infurlated 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 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 conservatively managed banks by offering a higher rate of interest than the latter could pay. This objection is urged as If It were an unanswerable one. But let us see how asily It can be met. Since the law makes all of the banks liable for the obligation of each bank, the law should prohibit any abuse of this security by any bank. and in Oklahoma the banking board has already fixed the rate of interest that can be paid to depositors. According to the rules of the banking board, no bank is permitted to pay more than three per cent on short-time deposits or more than four per cent on more. time deposits running for six months or It has also been urged as an objection that under the guaranty system a big bank would have no advantage over a little bank. Even if this argument were sound, It could not weigh against the advantages of the system. for banks are made for the people, not the people for the banks. While there are advantages in having big banks, the advantages are not sufficient to justify the deopardizing of the depositor or of the business interests of a community. But. as a matter of fact. the big bank would still have several advantages over the small one. In the first place, it could make larger loans than the small bank. For instance, a bank with $1. 000 capital and surplus could, as at present, 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 itself draw to the large bank the large deposits and the men doing business upon a large scale, for deposits follow accommodations. Then, too, there is a certain business advantage in deposting with a big bank. It is worth something to be able to refer to a big bank when one's financial 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 advantage 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 It under the guaranty system it should not begrudge the smaller banks the advantage which the them. guaranty of deposits will bring to I can not pass from this subject without referring to the fact that the big bank needs the guaranty as well as the little one, for big banks fall as well as small banks, and the bigger the bank the greater the calamity to the community 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 banks. It has sometimes been objected that the guaranty system would bring into the banking business a lower class of men and reduce the average in character. On the contrary, the guaranty of deposits, I submit, would. If it made any difference in this respect, bring into the banking business a better class of men and raise, if that is possible, the average of character. It is not to a man's discredit that he is not willing that one of his fellow men should lose money on his account. Is it 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 business man may be Induced to take stock in a bank. It may be that his name is desired to give standing and credit to the bank. but such a man is constantly haunted by the fear that a bank official may be guilty of criminal conduct which will bring the bank into insolvency. It is even possible that the bank's assets may be entirely dissipated. and that the honest citizen, who has become a stockholder, may either be compelled to go beyond his legal liability or meet the bitter criticism of the deposttors who have suffered by the failure. Would It not be worth something to the stockholder, In peace of mind, to know that the maximum of his loss would be the value of his stock and the 100 per cent liability, and that no depositor could lose anything? am convinced that the guaranty of deposits would not lead to degeneration in the personnel of the bankers. To justify a law guaranteeing depost-

7. October 1, 1908 Mexico Weekly Ledger Mexico, MO
Article from Mexico Weekly Ledger, October 1, 1908

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ing banks from their own officials and directors. Why? Because there has been no mutual responsibility. When all banks become liable for the deposits of each, the stockholders will insist upon a the enactment of a law making it criminal offense for a bank official to loan more than the prescribed amount to one individual. At present we have a law prohibiting the loaning of more than one-tenth of the capital and surplus to one person or corporation. but the law is only directory Of course, if the comptroller can suspend a bank it violates the law, but the law is not enforced, because the enforcement of such a law would throw the punishment the upon innocent stockholders and upon a community, since the suspension of bank inflicts a great loss upon stockholders and disturbs the business of the city or town in which the bank is located. The law should make it a criminal offense to loan more than the prescribed amount to one person, and we would probably be able to secure the passage of a law prohibiting market speculation by bank officials. The Oklahoma plan is working satisfactorily. A bank recently failed in Oklahoma; within forty-eight minutes after the notice of suspension, the officer in charge had authority to pay all deposItors, and then the banking board proceeded to collect the assets of the bank and to prosecute the officials criminally. When the business was closed up, the stock holders passed a resolution thanking the state board for its prompt action, the action of the board being a protection to the stockholders, as well as to the depositors and to the public generally Compare this failure under the guaranty system with a failure where there is no guaranty In Oklahoma the bank commissioner telephoned the farmers to come in and get their money, and the answer was: am busy today with my crop: I will be in in a day or two.' In Cleveland, Ohio, a bank failed about the same time, and the papers announced "twelve hundred 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 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 conservatively managed banks by offering a higher rate of interest than the latter could pay. This objection is urged as If it were an unanswerable one. But let us see how asily it can be met. Since the law makes all of the banks liable for the obligation of each bank, the law should prohibit any abuse of this security by any bank, and in Oklahoma the banking board has already fixed the rate of interest that can be paid to depositors. According to the rules of the banking board, no bank is permitted to pay more than three per cent on short-time deposits or more than four per cent on time deposits running for six months or more. It has also been urged as an objection that under the guaranty system a big bank would have no advantage over a little bank. Even If this argument were sound, it could not weigh against the advantages of the system. for banks are made for the people, not the people for the banks. While there are advantages in having big banks, the advantages are not sufficient to justify the jeopardizing of the depositor or of the business interests of a community But, as a matter of fact, the big bank would still have several advantages over the small one. In the first place, it could make larger loans than the small bank. For instance, a bank with $1, 000. 000 capital and surplus could, as at present, 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 itself draw to the large bank the large deposits and the men doing business upon a large scale, for deposits follow accommodations. Then. too, there is a certain business advantage in deposting with a big bank. It is worth something to be able to refer to a big bank when one's financial 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 advantage 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 it under the guaranty system: it should not begrudge the smaller banks the advantage which the guaranty of deposits will bring to them. I can not pass from this subject without referring to the fact that the big bank needs the guaranty as well as the little one, for big banks fail as well as small banks, and the bigger the bank the greater the calamity to the community 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 I against the failure of the small banks. It has sometimes been objected that the guaranty system would bring into the banking business a lower class of men and reduce the average in character On the contrary, the guaranty of deposits, I submit, would, if it made any difference in this respect, bring into the banking business a better class of men and raise, if that is possible, the average of character. It is not to a man's discredit that he is not willing that one of his fellow men should lose money on his account. Is It 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 business man may be induced to take stock in a bank. It may be that his name is desired to give standing and credit to the bank, but such a man is constantly haunted by the fear that a bank official may be guilty of criminal conduct which will bring the bank into insolvency. It is even possible that the bank's assets may be entirely dissipated, and that the honest citizen, who has beb come a stockholder, may either be compelled to go beyond his legal liability or meet the bitter criticism of the depositors who have suffered by the failure. Would it not be worth something to the stockholder in peace of mind, to know ba that the maximum of his loss would be a the value of his stock and the 100 per cent liability, and that no depositor could lose anything? I am convinced that the guaranty of deposits would not lead to degeneration in the personnel of the bankers. To justify a law guaranteeing depositors. It is not necessary to show that the advantage to the bankers would amount to more than the tax. The examination of the banks would continue to be made th at the expense of the banks, even if It were certain that the examination was of no pecuniary advantage to the banks. The law would continue to require a certain amount of reserve to be kept on

8. October 1, 1908 The Butler Weekly Times Butler, MO
Article from The Butler Weekly Times, October 1, 1908

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# BANK GUARANTY ful cause of disaster, and it has been impossible to secure legislation protect-ing banks from their own officials and directors. Why? Because there has been no mutal responsibility. When all banks become liable for the deposits of each, the stockholders will insist upon the enactment of a law making it a criminal offense for a bank official to loan more than the prescribed amount to one individual. At present we have a law prohibiting the loaning of more than one-tenth of the capital and surplus to one person or corporation, but the law is only directory. Of course, the comptroller can suspend a bank if it violates the law, but the law is not enforced, because the enforcement of such a law would throw the punishment upon In-nocent stockholders and upon the community, since the suspension of a bank inflicts a great loss upon stockholders and disturbs the business of the city or town in which the bank is located. The law should make it a criminal of-fense to loan more than the prescribed amount to one person, and we would probably be able to secure the passage of a law prohibiting market speculation by bank officials. The Oklahoma plan is working satis-factorily. A bank recently failed in Ok-lahoma; within forty-eight minutes af-ter the notice of suspension, the officer in charge had authority to pay all de-positors, and then the banking board proceeded to collect the assets of the bank and to prosecute the officials cerimi-nally. When the business was closed up, the stockholders passed a resolution thanking the state board for its prompt action, the action of the board being a protection to the stockholders, as well as to the depositors and to the public gen-erally. Compare this failure under the guaranty system with a failure where there is no guaranty. In Oklahoma the bank com-missioner telephoned the farmers to come in and get their money, and the answer was: "I am busy today with my crop; I will be in in a day or two." In Cleveland, Ohio, a bank failed about the same time, and the papers announced "twelve hundred 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 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 conserva-tively managed banks by offering a higher rate of interest than the latter could pay. This objection is urged as if it were an unanswerable one. But let us see how easily it can be met. Since the law makes all of the banks liable for the obligations of each bank, the law should prohibit any abuse of this se-curity by any bank, and in Oklahoma the banking board has already fixed the rate of interest that can be paid to depositors, According to the rules of the banking board, no bank is permitted to pay more than three per cent on short-time de-posits or more than four per cent on time deposits running for six months or more. It has also been urged as an objection that under the guaranty system a big bank would have no advantage over a little bank. Even if this argument were sound, it could not weigh against the ad-vantages of the system, for banks are made for the people, not the people for the banks. While there are advantages in having big banks, the advantages are not sufficient to justify the jeopardizing of the depositor or of the business in-terests of a community. But, as a matter of fact, the big bank would still have several advantages over the small one. In the first place, it could make larger loans than the small bank. For instance, a bank with $1,000,000 capital and surplus could, as at present, 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 itself draw to the large bank the large deposits and the men do-ing business upon a large scale, for de-posits follow accommodations. Ther, too, there is a certain business advantage in depositing with a big bank. It is worth something to be able to refer to a big bank when one's financial stand-ing 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 advan-tage 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 it under the guaranty system; it should not begrudge the smaller banks the advantage which the guaranty of deposits will bring to them. I can not 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 as small banks, and the bigger the bank the greater the calamity to the community 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 banks. It has sometimes been objected that the guaranty system would bring into the banking business a lower class of men and reduce the average in character. On the contrary, the guaranty of de-posits, I submit, would, if it made any difference in this respect, bring into the banking business a better class of men and raise, if that is possible, the aver-age of character. It is not to a man's discredit that he is not willing that one of his fellow men should lose money on his account. Is it not a mark of char-acter that a man should be careful of his good name and considerate of the esteem of his fellows? At present a suc-cessful farmer or business man may be induced to take stock in a bank. It may be that his name is desired to give standing and credit to the bank, but such a man is constantly haunted by the fear that a bank official may be guilty of criminal conduct which will bring the bank into insolvency. It is even possible that the bank's assets may be entirely dissipated, and that the honest citizen who has become a stockholder, may either be compelled to go beyond his legal liability or meet the bitter criticism of the depositors who have suffered by the failure. Would it not be worth something to the stockholder, in peace of mind, to know that the maximum of his loss would be the value of his stock and the 100 per cent liability, and that no depositor could lose anything? I am convinced that the guaranty of deposits would not lead to degeneration in the personnel of the bankers. To justify a law guaranteeing depos-itors, it is not necessary to show that the advantage to the bankers would amount to more than the tax. The examination of the banks would continue to be made at the expense of the banks, even if were certain that the examination was of no pecuniary advantage to the bank. The law would continue to require a certain amount of reserve to be kept on hand, even if it were certain that such a law brought no pecuniary gain to the bank; and so the banks ought to be compelled to insure their depositors.

9. October 9, 1908 The Farmington Times Farmington, MO
Article from The Farmington Times, October 9, 1908

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# IMPOSSIBLE TO SECURE LEGISLATION ire legislation protecting banks from their own officials and directors. Why? Because there has been no mutal responsibility. When all banks become liable for the deposits of each, the stockholders will insist upon the enactment of a law making it a criminal offense for a bank official to loan more than the prescribed amount to one individual. At present we have a law prohibiting the loaning of more than one-tenth of the capital and surplus to one person or corporation, but the law is only directory. Of course, the comptroller can suspend a bank if it violates the law, but the law is not enforced, because the enforcement of such a law would throw the punishment upon innocent stockholders and upon the community, since the suspension of a bank inflicts a great loss upon stockholders and disturbs the business of the city or town in which the bank is located. The law should make it a criminal offense to loan more than the prescribed amount to one person, and we would probably be able to secure the passage of a law prohibiting market speculation by bank officials. The Oklahoma plan is working satisfactorily. A bank recently failed in Oklahoma; within forty-eight minutes after the notice of suspension, the officer in charge had authority to pay all depositors, and then the banking board proceeded to collect the assets of the bank and to prosecute the officials criminally. When the business was closed up, the stockholders passed a resolution thanking the state board for its prompt action, the action of the board being a protection to the stockholders, as well as to the depositors and to the public generally. Compare this failure under the guaranty system with a failure where there is no guaranty. In Oklahoma the bank commissioner telephoned the farmers to come in and get their money, and the answer was: "I am busy today with my crop; I will be in in a day or two." In Cleveland, Ohio, a bank failed about the same time, and the papers announced "twelve hundred 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 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 conservatively managed banks by offering a higher rate of interest than the latter could pay. This objection is urged as if it were an unanswerable one. But let us see how easily it can be met. Since the law makes all of the banks liable for the obligations of each bank, the law should prohibit any abuse of this security by any bank, and in Oklahoma the banking board has already fixed the rate of interest that can be paid to depositors. According to the rules of the banking board, no bank is permitted to pay more than three per cent on short-time deposits or more than four per cent on time deposits running for six months or more. It has also been urged as an objection that under the guaranty system a big bank would have no advantage over a little bank. Even if this argument were sound. It could not weigh against the advantages of the system, for banks are made for the people, not the people for the banks. While there are advantages in having big banks, the advantages are not sufficient to justify the jeopardizing of the depositor or of the business interests of a community. But, as a matter of fact, the big bank would still have several advantages over the small one. In the first place, it could make larger loans than the small bank. For instance, a bank with $1,000,000 capital and surplus could, as at present, 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 itself draw to the large bank the large deposits and the men doing business upon a large scale, for deposits follow accommodations. Then, too, there is a certain business advantage in depositing with a big bank. It is worth something to be able to refer to a big bank when one's financial 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 advantage 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 it under the guaranty system; it should not begrudge the smaller banks the advantage which the guaranty of deposits will bring to them. I can not pass from this subject without referring to the fact that the big bank needs the guaranty as well as the little one, for big banks fail as well as small banks, and the bigger the bank the greater the calamity to the community 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 banks. It has sometimes been objected that the guaranty system would bring into the banking business a lower class of men and reduce the average in character. On the contrary, the guaranty of deposits, I submit, would, if it made any difference in this respect, bring into the banking business a better class of men and raise, if that is possible, the average of character. It is not to a man's discredit that he is not willing that one of his fellow men should lose money on his account. Is it 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 business man may be induced to take stock in a bank. It may be that his name is desired to give standing and credit to the bank, but such a man is constantly haunted by the fear that a bank official may be guilty of criminal conduct which will bring the bank into insolvency. It is even possible that the bank's assets may be entirely dissipated, and that the honest citizen, who has become a stockholder, may either be compelled to go beyond his legal liability or meet the bitter criticism of the depositors who have suffered by the failure. Would it not be worth something to the stockholder, in peace of mind, to know that the maximum of his loss would be the value of his stock and the 100 per cent liability, and that no depositor could lose anything? I am convinced that the guaranty of deposits would not lead to degeneration in the personnel of the bankers. To justify a law guaranteeing depositors, it is not necessary to show that the advantage to the bankers would amount to more than the tax. The examination of the banks would continue to be made at the expense of the banks, even if it were certain that the examination was of no pecuniary advantage to the banks. The law would continue to require a certain amount of reserve to be kept on hand, even if it were certain that such a law brought no pecuniary gain to the bank; and so the banks ought to be compelled to insure their depositors against loss, even if it could not be

10. February 4, 1909 The Ellensburg Dawn Ellensburg, WA
Article from The Ellensburg Dawn, February 4, 1909

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The chief cause of bank failures is the making of excessive loans to directors or officials of the bank. This is the fruitful cause of disaster, and it has been impossible to secure legislation protecting banks from their own officials and directors. Why? Because there has been no mutual responsibility. When all banks become liable for the deposits of each, the stockholders will insist upon the enactment of a law making it a criminal offense for a bank official to loan more than the prescribed amount to one individual. At present we have a law prohibiting the loaning of more than one-tenth of the capital and surplus to one person or corporation, but the law is only directory. Of course, the comptroller can suspend a bank if it violates the law, but the law is not enforced, because the enforcement of such a law would throw the punishment upon innocent stockholders and upon the community, since the suspension of a bank inflicts a great loss upon stockholders and disturbs the business of the city or town in which the bank is located. The law should make it a criminal offense to loan more than the prescribed amount to one person, and we would probably be able to secure the passage of a law prohibiting market speculation by bank officials. The Oklahoma plan is working satisfactory. A bank recently failed in Oklahoma; within forty-eight minutes after the notice of suspension, the officer in charge had authority to pay all depositors, and then the banking board proceeded to collect the assets of the bank and to prosecute the officials criminally. When the business was closed up, the stockholders passed a resolution thanking the state board for its prompt action, the action of the board being a protection to the stockholders, as well as to the depositors and to the public generally. Compare this failure under the guaranty system with a failure where there is no guaranty. In Oklahoma the bank commissioner telephoned the farmers to come in and get their money, and the answer was: "I am busy today with my crop: I will be in in a day or two." In Cleveland, Ohio, a bank failed about the same time, and the papers 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 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 conservatively managed banks by offering a higher rate of interest than the latter could pay. This objection is urged as if it were an unanswerable one. But 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 fixed the rate of interest that can be paid to depositors. According to the rules of the banking board, no bank is permitted to pay more than three per cent on short-time deposits or more than four per cent on time deposits running for six months or more It has also been urged as an objection that under the guaranty system a big bank would have no advantage over a little bank. Even if this argument were found, it could not weigh against the advantages of the system, for banks are made for the people, not the people for the banks. While there are advantages in having big banks, the advantages are not sufficient to justify the jeopardizing of the depositor or of the business interests of a community But, as a matter of fact, the big bank