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# SPECIAL LEGISLATIVE COMMITTEE ON BANKING DISCUSSES GUARANTY PLAN.
HAS A TENDENCY TO INVITE INFERIOR MEN INTO BUSINESS.
WOULD SEGREGATE SAVINGS FROM COMMERCIAL DEPOSITS.
Madison, Jan, 17.
The report of the special legislative committee on banking, making its report to the legislature, proclaims at the very opening that no absolute preventive or bank failures can be provided by legislative enactments. "If the depositor, therefore, is to be made absolutely safe and secure," says the committee, "it is essential that some method be found by which his money may be restored to him in the event of the failure of a bank in which his money may happen to be deposited. Living, as we do in this day, in the light of the twentieth century civilízation, no scheme has yet been developed and proved which affords to the depositor absolute security. The most recent suggestion looking to this end is the plan commonly designated the "guaranteeing of bank deposits" after the manner exemplified by legislation enacted in a number of states. This was one of the subjects which was most diligently and exhaustively considered by this committee."
The committee discusses at length the question of guarantee of bank deposits, taking for its text the Oklahoma law which has been the source of much discussion. Speaking upon that question the committee concludes:
"We are of the opinion that the guaranty law has a tendency to invite men into the banking business of inferior banking ability, and the extent to which men of such inferior ability will be able to secure the control of banks and secure the management and control of the funds belonging thereto, depends to a considerable extent, on laws tending to discourage men of inferior qualifications from entering the business and on the strength and character of the commissioner of banking or other officer who administers the banking law."
The committee made a careful investigation of the causes of the failure of the Columbia Bank & Trust company of Oklahoma City, which suspended and was taken over by the banking board on the day of the arrival there of the committee upon the occasion of its visit to that state.
"The closing of the bank caused no riffle in the business world of Oklahoma City," says the report, "the public was not excited, there was no run on any other bank, state or national. Depositors apparently had confidence that they would get their money. They acted in an orderly and well behaved fashion. They drew their money out of the defunct bank and placed it in other banks. As a matter of fact, at the close of business on the day after the failure, the books of every other bank in the city showed an increase in deposits. While the lobby of the bank was quite well filled with depositors, there was no excitement or disorder, and so far as the street was concerned, there was nothing to raise the suspicion on the part of any one that he was passing by a bank whose doors had just been closed. No business interests in the city were disturbed, compromised or embarrassed in any manner.
"The committee came in contact with a great many of the people who had money on deposit in the bank, some of whom appeared before the committee, and all gave expression to the sentiment that they were in no particular hurray for their money, that they knew it was safe and that they would call for it after the rush was over."
A tabulated statement of the growth of Oklahoma banks, state and national, is given, covering a period of four months, and an analysis of the statement indicates that the total deposits of the state of Oklahoma, during the time, increased 43.3 per cent. in both state and national banks; that the increase in state banks, during that time, was 137 per cent., while the loss in national banks was one-half of one per cent.; that during the period the capital of both state and national banks increased approximately 10 per cent., and the increased capital stock in state banks was 75 per cent., while the decrease in stock of national banks was 20 per cent. February 29, 1908, the capital stock in the state banks, was 32 per cent. of their deposits, and on February 14, 1908, the capital stock of National banks was also 32 per cent. of their deposits. On June 28, 1909, the capital stock of the state banks was 24 per cent. of their deposits, while the capital stock of national banks, was 25½ per cent. of their deposits.
The Oklahoma guaranty law went into effect February 14, 1908, since which time 165 state banks have been chartered, 73 of which were conversions of national banks, with $7,300,000.00 capital,
Clearing House Association.
"The suggestion was made to this committee by a number of bankers, that country clearing house associations could be established for that purpose with equally as good results, and it may be said that a number of prominent bankers have written papers on this subject in which the position is taken that the country clearing house association may be successfully formed and conducted and that it will serve a very useful purpose, but not so much for the purpose of afford-
