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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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FORTY-SECOND LEGISLATURE—REGULAR SESSION.
515
one or more of the sections, subsections, sentences, clauses or
phrases be declared unconstitutional.
SEC. 14. All laws and parts of laws in conflict herewith are
hereby repealed.
SEC. 15. The importance of this measure for the benefit of
public safety and protection of the highways creates an emergency and an imperative public necessity requiring the suspension of the constitutional rule relating to the reading of bills
on three several days in each House, and such rule is hereby
suspended, and this act shall take effect and be in force from
and after its passage, and it is so enacted.
Approved June 11, 1931.
Effective May 28, 1931.
[Nom: H. B. No. 336 passed the House by a vote of 103
yeas, 24 nays; passed the Senate, with amendments, by a vote
of 22 yeas, 6 nays; House refused to concur in Senate amendments and Free Conference Committee was appointed. House
adopted Conference Committee report by a vote of 82 yeas, 26
nays; Senate adopted Conference Committee report by a viva
voce vote.]
RELATING TO MONEY IN DEPOSITORS' GUARANTY
FUND.
H. B. No. 835.]
CHAPTER
283.
An Act relating to Depositors' Guaranty Fund
by calling attention to the
fact that certain sums of money have been on deposit
for several
years in the State Treasury and on deposit with certain
banks over the
State, which funds rightfully belong to depositors of
the failed banks
named herein and to member banks who have placed
in the hands of
the State Banking Commissioner and in the State
Treasury the aforementioned funds as a guaranty fund for the protection
terest bearing unsecured deposits of said banks; providing of non-infor the distribution of the sums herein mentioned to the depositors
of the nine
(9) failed banks and to the member banks who had
placed these funds
In the hands of the Banking Commissioner and
State Treasury; providing for the expense incident to carrying out the provision
s of this
bill, ratifying the order of the State Banking Board
as herein provided;
providing that no suit may he filed except when the right
is expressly
given herein, and declaring an emergency.
Re it enacted by the Legislature of the State of Texas:
SECTION 1. Whereas, there are large sums of money,
to-wit,
approximately four hundred and sixty-six thousand dollars
($466,000) in the State Treasury and approximately one million,
two hundred and twenty-six thousand dollars ($1,226,000) in
possession of the Banking Commissioner of Texas; which said
funds were created and accumulated under the Depositors'
Guaranty Fund law; and
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Federal Reserve Bank of St. Louis
516
GENERAL LAWS.
esaid Depositors' Guaranty Fund
SEC. 2. Whereas, the afor slature of Texas more than four
law was repealed by the Legi funds have been subject to dis(4) years ago; and the aforesaid rd of Texas since the repeal
tribution by the State Banking Boa
of said law; and
total sum there are deposSEC. 3. Whereas, of the aforesaiddeposits are secured by the
itors of nine (9 )failed banks whose depositors' claims remainDepositors' Guaranty Fund, and such
nteen thousand, one huning unpaid amount to one hundred sevene cents ($117,107.31);
ty-o
thir
dred and seven dollars and
and
million, five hundred and
SEC. 4. Whereas, the remaining one 000) belongs and should
575,
seventy-five thousand dollars ($1.
Depositors' Guaranty Fund
the
of
s
ber
mem
s,
bank
the
be paid to
to the amount contributed by
system of banking, in proportion
each.
g Board of Texas, a govSEC. 5. Whereas, the State Bankin April, A. D. 1931, passed
ernmental agency, on the 17th day of
of the aforesaid sums
an order providing for the distribution
of money.
State Banking Board aforeSEC. 6. Whereas, the order of the equitable distribution of the
said provides for a proper, legal and
funds involved.
hereinafter specifically 4.SEC. 7. That all money or moneys Comm
issioner of Texas, or
g
kin
scribed in the hands of the Ban
rol, wherever the same
in his possession, or subject to his cont
e Treasurer of Texas
Stat
the
be situated, be immediately paid to
Fund, to-wit:
as bailee for the Depositors' Guaranty
under his control, which
or
s,
(a) Any sum now in his hand
ey withdrawn from the guarrepresents the unused part of mon
sury) with which to pay
anty fund jthe one-fourth in the Trea
were secured by the
sits
depo
se
who
s
depositors of failed bank
oximates two hunappr
d
Depositors' Guaranty Fund; this fun red and sixty dollars and
hund
n
seve
dred thirty-eight thousand,
eighty-four cents ($238,760.84). s, or under his control, which
(b) Any sum now in his hand
of liquidated banks whose
represents dividends from the assetsdrawn from the Depositors'
with
depositors were paid with funds in the Treasury) to which the
Guaranty Fund (the one-fourth paid would have been entitled
depositors whose deposits were so banks; this fund amounts to
as general creditors of such failed
ty-six thousand, two hunapproximately four hundred and nine
ine cents, ($496,215.99).
ty-n
nine
and
ars
dred and fourteen doll
under his control, to
or
s,
(c) Any sum now in his hand secured by the Depositors'
which depositors whose claims were tled from the assets of
Guaranty Fund would have been enti
creditors of such failed banks
liquidated failed banks as general rs
paid with money withbut for the fact that such deposito were
d (the one-fourth in
Fun
anty
Guar
drawn from the Depositors'
guaranty fund depositors
the Treasury); the sum to which the approximately four hunwould have been entitled amounts to
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Federal Reserve Bank of St. Louis
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FORTY-SECOND LEGISLATURE—REGULAR SESSION..
517
dred ninety thousand, seven hundred thirty-nine dollars and
sixty-three cents ($490,739.63).
(d) Any sum representing interest earned by the above
funds set out in (a), (b), and (c), above, and now on hand.
(e) Any accretion to said funds from whatever source derived.
SEC. 8. That all depositors' claims, real or pretended, against
the Depositors' Guaranty Fund not heretofore allowed are hereby
disallowed; and where any reservation has been made by reason
of such claims the same shall be paid to the State 'treasurer as
bailee for the Depositors' Guaranty Fund.
That the accounts kept by the Banking Commissioner of
Texas with banks formerly in the Depositors' Guaranty Fund
system, showing miscellaneous charges and credits made and
entered unon the accounts of such banks by reason of the failure and liquidation of other banks and which do not come
under t'e classifications herein otherwise referred to, shall be
cancelled and no longer held as a liability or an asset of any such
banks.
SEC. 9. That the Banking Commissioner of Texas immediately
furnish the Attorney General a complete list, certified by him to
be true and correct, showing the name of each depositor of the
banks hereinafter named, together with the last known address
of each such depositor, whose deposits have been approved by
him as payable out of the Depositors' Guaranty Fund, the
amount of each deposit so approved and the balance remaining
unpaid on each deposit.
The banks whose non-interest-bearing unsecured depositors
are entitled to be paid out of the Depositors' Guaranty Fund and
who have not been paid in full are as follows:
Commercial Guaranty State Bank of Longview,
Commercial State Bank of Cisco,
Altoga State Bank of Altoga,
Farmers and Merchants State Bank of Mt. Calm.
Guaranty State Bank of Trinidad,
Farmers State Bank of Kemp,
Guaranty State Bank of Gunter,
Addison State Bank of Addison,
First State Bank of Belton.
SEC. 10. The Attorney General, as chairman of the State
Banking Board, shall immediately upon the receiving of said
list, issue vouchers on the State Treasurer as bailee for such
Depositors' Guaranty Fnnd for the amount of each depositor's
approved net claim against the Depositors' Guaranty Fund remaining unpaid and mail same to each such depositor, and
the State Treasurer, as such bailees, shall, when the said
voucher is presented, properly endorsed by the payee therein, pay the same in cash from any funds in the State Treasury in his possession as bailee of the Depositors' Guaranty Fund.
The form of such voucher shall be substantially as follows:
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Federal Reserve Bank of St. Louis
GENERAL LAWS.
518
Austin, Texas, April 17, 1931.
The State Banking Board of Texas.
Pay to the order of
(dollars).
Depositors' Guarbailee,
rer,
Treasu
rt,
State
Lockha
To Charley
anty Fund, Austin, Texas.
The State Banking Board.
By
Attorney, General Chairman.
Endorsement :
When paid, I accept the sum for which this voucher is drawn
in full satisfaction of my claim against the Depositors' Guaranty
Fund of Texas.
SEC. 11. That the three-fourths demand deposit to the credit
of the State Banking Board in the various member banks which
has not been previously written off the books of each such bank
having such deposit, shall be, and the same is here authorized
to be, written and charged off the books of each such bank; and
the same shall not hereafter be considered as an asset of the
Depositors' Guaranty Fund.
That the two per cent (2%) assessment levied by the State
Banking Board on May 2, 1927, is hereby rescinded and held
for naught.
That those banks which have heretofore remitted their threefourths demand deposit and/or two per cent (2,) assessment
levied on May 2, 1927, to the State Banking Board shall be entitled to the return thereof; and the same shall be by said State
Banking Board returned to each such bank, the amount so paid
by each such bank by reason of said three-fourths demand deto
posit and/or said two per cent (2';) assessment; said fund
chairl,
as
ey
Genera
Attorn
the
by
drawn
r
be paid by a vouche
of
man of the State Banking Board, on the State Treasurerany
of
out
Fund,
ty
Guaran
ors'
Texas, as bailee for the Deposit
in the
such funds as shall now be or shall hereafter be placed
rer,
Treasu
State
the
of
credit
the
State Treasury of Texas to
r to be
vouche
said
ty
Fund;
Guaran
ors'
Deposit
the
of
as bailee
in words and figures substantially as follows:
Austin, Texas, April 17, 1931.
The State Banking Board of Texas.
(dollars).
Pay to the order of
Guarors'
Deposit
To Charley Lockhart, State Treasurer, bailee,
anty Fund, Austin, Texas.
The State Banking Board.
By
Attorney General, Chairman.
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Federal Reserve Bank of St. Louis
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FORTY-SECOND LEGISLATURE—REGULAR SESSION.
519
Endorsement:
When paid, I accept the sum for which this voucher is drawn
in full satisfaction of my claim against Depositors' Guaranty
Fund of Texas, as follows:
Two per cent assessment levied May 2, 1927.
Three-fourths demand deposit paid.
That any such fund or funds, disposition of which was made
in the preceding paragraph hereof, not now being in the State
Treasury to the credit of the State Treasurer, as bailee for the
Depositors' Guaranty Fund, shall be immediately placed in said
State Treasury, as aforesaid.
That the suits now pending in various district courts of the
State against various banks for the aforesaid three-fourths demand deposit and/or the aforesaid two per cent (2%) assessment levied on May 2, 1927, shall be dismissed, and the costs
incurred be paid as a part of the expenses out of any funds in
the possession of the State Treasurer, as bailee for the Depositors' Guaranty Fund.
SEC. 12. The banks embraced in the description and in this
Act referred to as "banks as herein described' shall mean the
109 banks that were members of the Guaranty Fund System
on and after September 29, 1926, and also the 759 Guaranty
Fund banks the had withdrawn from the Guaranty Fund System prior to September 29, 1926, which banks were authorized
to charge off their three-fourths demand deposits amounting to
two million, five hundred ninety-two thousand two hundred
seventy-one dollars and thirty-eight cents ($2,592,271.38) by the
State Banking Board by an order entered on the 23rd day of
December, 1926.
In arriving at the amount to which each bank herein described
is entitled, the audit hereinafter provided for shall show those
banks which have already received payment of their pro rata
part out of the funds described in subsection (a) of Section
7 hereof, and likewise show the amount thereof paid to each
of them. It shall also show those banks herein described which
have received sixty per cent (60%) of their one-fourth cash interest in the guaranty fund in accordance with two previous orders of said Board and the amount thereof paid to each of them.
It shall also show those banks herein described that have not received their pro rata part of said funds, and likewise show the
amount of such pro rata of such funds necessary to equalize
them with those banks that have been paid. And, as so shown,
the amount necessary to be paid to those banks which have not
'been paid their pro rata share from each of such funds shall be
immediately paid said banks by the State Treasurer as bailee
of the Depositors' Guaranty Fund, on vouchers drawn by the •
Attorney General as chairman of the State Banking Board; the
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Federal Reserve Bank of St. Louis
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Auninimml
520
GENERAL LAWS.
form of such vouchers shall be in words and figures substantially
as follows:
Austin, Texas.
Texas.
of
Board
The State Banking
_$
_ (dollars).
Pay to the order of
' GuarDepositors
bailee,
,
Treasurer
To Charley Lockhart, State
anty Fund, Austin, Texas.
State Banking Board.
By
Attorney General, Chairman.
nt:
Endorseme
This voucher is received by the payee under the terms of an
. order of the State Banking Board of Texas, dated April 17, A. D.
1931.
SEC. 13. The balance unused, after the payments hereinabove provided for, less such expenses as shall be hereinaftkr
provided for, shall be paid to the Banks as herein described
which contributed to such fund or funds in the proportion that
the total amount paid into the fund by each such bank bears to
the total amount paid in by all such banks herein described.
After the completion of the audit hereinafter provided for,
the Attorney General, as chairman of the State Banking Board,
shall immediately issue a voucher on the State Treasurer, as
bailee for such Depositors' Guaranty Fund, for the amount of
each bank's claim as shown by said audit and mail same to each
such banks; and the State Treasurer shall, when said voucher
is presented, properly endorsed by such bank, pay same in
cash from such funds as shall be in the State Treasury to the
credit of the State Treasurer as bailee for the Depositors' Guaranty Fund; said voucher shall be in words and figures substantially as follows:
Austin, Texas, April 17, 1931.
The State Banking Board of Texas.
_ (dollars).
$
Pay to the order of ____
To Charley Lockhart, State Treasurer, bailee, Depositors' Guaranty Fund, Austin, Texas.
The State Banking Board.
By
Attorney General, Chairman.
Endorsement:
When paid, I accept the sum for which this voucher is drawn
in full satisfaction of my claim against Depositors' Guaranty
Fund of Texas.
SEC. 13a. The distribution of funds made to the 109 banks
remaining in the Guaranty Fund System aforesaid, in Sections
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Federal Reserve Bank of St. Louis
FORTY-SECOND LEGISLATURE—REGULAR SESSION.
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12 and 13 hereof, is on condition that the sum of $49,169.90
**all be deducted pro rata from the portion which said 109 banks
are entitled to receive. Said $49,169.90 shall be a special contribution from said 109 banks towards paying the balance due
to the unpaid depositors of the nine failed banks hereinabove
provided for.
SEC. 14. The State Banking Board, or a majority of such
board, shall immediately employ a competent accountant or accountants, and such assistants as may be by it deemed necessary,
who shall make a full and complete audit of all such funds as
shall now be or hereafter be placed in the State Treasury under
this act, and all the books and records of the Banking Commissioner of Texas as such Commissioner and/or as liquidating
agent of failed Guaranty Fund Banks, and of the State Treasurer as bailee of the Depositors' Guaranty Fund, and of the State
Banking Board of Texas; to the end that such audit will reflect
the amount paid by each bank by reason of the Depositors' Guaranty Fund law and the amounts paid to the banks herein described as their pro rata out of the fund, described in sub-section (a) of Section 7 hereof, and out of the one-fourth cash interest in the custody of the State Treasurer as bailee for the
Depositors' Guaranty Fund, also the amount necessary to equalize such payments to the banks herein described to which no
such payments have been made, out of such fund described in
sub-section (a) 'of Section 7 hereof, or out of said one-fourth
cash interest, with those banks to whom such payments have
been made therefrom and the amount of such guaranty fund
now unused so that the State Banking Board may disburse the
balance now unused to the banks entitled thereto in accordance
with the provisions of the preceding Section 13 hereof.
SEC. 15. That all sums under the Control of the State Banking Board or the Banking Commissioner of Texas in the form
of unclaimed deposits or unclaimed sums due to protected depositors of failed Guaranty Fund Banks, shall be placed in the
trust fund as provided by Article 465, Revised Civil Statutes of
Texas.
SEC. 16. That all assets of Guaranty Fund Banks in liquidation shall be forthwith reduced to cash, and the liquidation of
such banks be immediately closed, and the portion of such assets
belonging to or due to the guaranty fund shall be forthwith
paid to the State Treasurer as bailee of the Depositors' Guaranty Fund.
SEC. 17. The expenses incident to carrying out the provisions of this law, including the audit hereinbefore provided
for, shall be paid by the State Treasurer as bailee for the Depositors' Guaranty Fund on statements duly sworn to and approved by a majority of said board, together with the expenses
aforesaid, there shall be included the costs incurred in the cause
entitled J. C. McNair et al. vs. Farmers State Bank et al., No.
48965, on the docket of the Ninety-eighth Ditrict Court of
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Federal Reserve Bank of St. Louis
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522
GENERAL LAWS.
Travis county, Texas, and such attorney's fees allowed the attorneys in said cause, to be chargeable as directed by said court.
SEC. 18. That the order of the State Banking Board of Texas made and entered on the 17th day of April, A. D. 1931, as
modified by judgment entered the 11th day of May, A. D. 1931,
in cause No. 48965, entitled J. C. McNair et al. vs. Farmers
State Bank et al., in the Ninety-eighth District Court of Travis
county, Texas, is in all things ratified and confirmed.
SEC. 19. No suit at law or in equity shall lie against the
State Banking Board of Texas, or any member thereof, and no
suit shall be filed under the provisions of this or any other law
except an action for mandamus in the Supreme Court of this
State against said board or any official charged with the duty
under this act to compel said board or said official to carry out
the provisions hereof.
No suit at law or in equity shall lie against any individual
member of said board by reason of such distribution as shall
be made under the order of the Banking Board hereby ratified,
or any previous order of the State Banking Board recognized in
this bill.
SEC. 20. All laws and parts of laws in conflict with this act
are hereby repealed in so far as they conflict, and the invalidity of any section of this act, or any part thereof, shall
not affect the remainder of such act, and it is hereby declared
that: the Legislature would have passed any section or provision hereof independently of all other sections or provisions.
SEC. 21. The fact that the Depositors' Guaranty Fund Law
has been repealed, and that the Depositors' Guaranty Fund
constitutes a fund which should be paid to the proper beneficiaries, and that the Legislature should enact adequate laws to
accomplish such purposes, creates an emergency and an imperative public necessity that the constitutional rule requiring all
bills to be read on three several days in each House be suspended,
and the same is hereby suspended, and that this act shall take
effect and be in force from and after its passage, and it is so
enacted.
Approved June 12, 1931.
Effective May 30, 1931.
[Nom: H. B. No. 835 passed the House by a vote of 108 yeas,
0 nays; passed the Senate by a vote of 31 yeas, 0 nays.]
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
A bank customer had left some bonds with the bank for safe keeping.
The bank had converted the bonds trIte,
cash on the advice of the
Commissioner of Insurance and Banking that
such procedure was legal.
The court held that the owner of the bonds was not a depositor within
the scope of the law, and was not entitled to compensation out of the
1/
km-l=m7WW-m7mmi. national bank held an overdraft
guaranty fund.—
against a State bank.
Being authorized by the Banking Commissioner
to make a deposit in the Ztate bank, the national bank paid its.
$30,000.00 on the overdraft.
The court held that the national bank
had not made a "nowinterest bearing unsecured deposit" within the
_
Deposits made by a county in Texas
meaning of the Vhranty law.—
in a bank whicki had failed to furnish the required bond but had
agreed that
he county funds should be covered by the guaranty fund,
o be so covered even though the agreement was illegal and
were heldA(
the b
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Federal Reserve Bank of St. Louis
knew the public nature of the deposits.
al V. Johnson (1924-257 SW 932).
1/ Tyler County State Bank et
National Bank of Dallas (1925-276
2/ Chapman et al v. Southwest
SW 731).
Chapman (1925-276 SW 654).
3/ Eastland County v.
•
APPENDIX A
TEXAS COURT CASES UNDER THE DEPOSIT GUARANTY LAW
Because of the number and variety of cases under the Texas deposit
guaranty lay that reached the State Supreme Court, or the Circuit Court
of Appeals, a summary of the important cases and of the decisions made
is given here.
I.
Cases distinguishing general depositor relationships
from other liabilities of bank
1. From special deposits
Tyler County State Bank, et al. v. Rhodes, Court of Civil Appeals of
Texas, Beaumont, Dec. 10, 1923. Liberty bonds left for safekeeping were
a special deposit and were not covered by the guaranty fund; therefore,
a claim could be made by the depositor against the bank. Also involved
and upheld was a 1914 Statute giving the Bank Commissioner authority
as liquidator of an insolvent bank to levy an assessment against the
bank's stockholders and to offset this assessment in case of nonpayment
against the stockholder's deposit account. 256 SW 947
Tyler County State Bank, et al. v. Johnson. A claim was denied that
the guaranty fund should cover the value of liberty bonds used by the bank
which had been deposited for safekeeping. 257 SW 952
2. From trust fund
Austin, Banking Commissioner, et a1. v. Lacy, et al., Court of Civil
Appeals of Texas, Texarkana, Feb. 1, 1928. In this particular case, •
decedent's estate is a general unsecured deposit, not a special deposit
or a trust fund. 2 SW(2d)876
3. From cashier's checks not arising from a deposit account
Middlekauff v. State Banking Board, et al., Supreme Court of Texas,
June 12, 1922. A depositor's check on an unsecured account in the amount
of $3,000 was given to the bank in return for a cashier's check, the
latter was still outstanding at the time the bank failed. It was held
that a cashier's check had the same legal effect as a certificate of deposit or a certified check (when issued in exchange for a check on an
open, unsecured, noninterest bearing account) and was payable out of
the guaranty fund. 242 SW 442.
W. O. Kidder v. Ed :all, Commissioner of Insurance and Banking, et
al., Supreme Court of Texas, May 9, 1923. The Commissioner of Banking,
in the allowance or rejection of claims against an insolvent State bank
taken under his control must exercise his judgment and discretion, and
this, involving questions of fact, is not subject to control by the Supreme
Court through writ of mandamus. 251 SW 497
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4. From clearing house certificate
Hall, Commissioner of Insurance and Banking v. First National Bank
of Jacksonville, et al., Court of Civil Appeals, April 11, 1923. /t was
held that an unpaid clearing house certificate, though issued on account
of clearings of checks on deposit accounts, vas not covered by the guaranty
fund since it had become a different type of obligation and the creditor
relationship was not that of a depositor-creditor. A rehearing was denied
May 23, 1923. 252 SW 828.
Hall, Commissioner of Insurance and Banking v. First NatiOnal Bank,
Court of Civil Appeals of Texas, Texarkana, June 21, 1923. A rehearing
of 252 SW 828 in which Court held error had been made and reversed the
judgment, ordering a new trial in the court below. 254 SW 522.
5. From liability as guarantor on a note which was overdue when bank
failed
Tyler County State Bank, et al. v. Seaboard State Bank & Trust Co.,
Court of Civil Appeals of Texas, Beaumont, Jan. 5, 1924. Notes presumably
guaranteed by the bank and returned by the correspondent bank for collection but unpaid at the time the bank failed were held to be a general
claim against the bank as guarantor and cL nut coastitute a depositor
relationship. 257 SW 951
6. From loan to bank
Chapman, et al. v. Hopper, Court of Civil Appeals of Texas, Texarkana,
March 20, 1924. A deposit by a stockholder, knowing the bank to be in
difficulties, to bolster the cash position of the bank and which was
claimed to have been understood by the bank as payment on stockholders'
assessment if the bank failed was held not to have been a general deposit,
but • loan and not applicable to the assessment made by the Commissioner
at the time of failure. It was also held to be a general claim against
the bank after its closing. 261 SW 166
Chapman, et al. v. Southwest National Bank of Dallas, Court of Civil
Appeals of Texas, Waco, June 18, 1925. Rehearing denied Oct. 8, 1925.
A correspondent bank to which an insolvent bank was indebteded attempted
to change such debt to a guaranteed deposit by "depositing" $30,000 and
crediting the overdrawn account of the insolvent bank. This was held
not to be a deposit within the meaning of the Statute. The Supreme Court
of Tesaf+r
enRalaft0.4ort 2
AppeaIi-AlinteTVIIntinA, nili41.111—C?gONtii; Bank, Court of Civil
A loan in the form of a deposit which was at first interest-bearing
and was later changed to non-interest-bearing was held to be an oAltga4ionn
of the bank and not of the guaranty fund at the time of failure. cy.4
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Federal Reserve Bank of St. Louis
-37. From prcmissory note of bank in purchase of bonds
Chapman, Commissioner of Insurance and Banking, et al. v. Tyler County,
Court of Civil Appeals of Texas, Beaumont, Feb. 114 1924. Time certificates
used for the purchase of guaranty bonds and issued to mature at various
dates without interest were held to be "nothing more than a sale, part for
cash and part on time, the time deposit slips being in effect nothing more
than noninterest-bearing promissory notes." These time certificates could
not be checked against and could not be converted into a checking account
without the consent of the bank. 259 SW 301
Tyler County v. J. L. Chapman, Supreme Court of Texas, April
Decision in 259 SW 301 upheld. 278 SW 1115
II.
1.
9,
1924.
Cases distinguishing interest-bearing or secured deposits
(not special deposits) from noninterest-bearing unsecured
deposits
Interest-bearing certificate changed to noninterest-bearing just before
bank closed
State Banking Board, et al. v. Filcher, Court of Civil Appeals of Texas
Dallas, Nov. 17, 1923. An interest bearing certificate of deposit, with the
right to be withdrawn and interest forfeited, was changed to a noninterestbearing certificate just prior to the bank's closing. This transaction was
held to be a deposit protected by the guaranty fund. 256 SW 996
State Banking Board, et al. v. Filcher, Commission of Appeals of Texas,
Section A, April 8, 1925. The decision rendered in 256 SW 996 was reversed.
270 5W 1004
Chapman, Commissioner of Insurance and Banking, et al. v. Mooney,
Board of Civil Appeals of Texas, Beaumont, Jan. 14, 1924. Rehearing denied
Jan. 30, 1924. Interest bearing deposits changed at the request of the
holders to noninterest-bearing deposit accounts just prior to the bank's
closing (Tyler County State Bank) were held to be not fraudulent and the
deposits were protected by the guaranty fund. 257 SW 1106
Turkey aate Bank, et al. v. Estelline State Bank, Court of Civil
Appeals of Texas, Amarillo, Feb. 13, 1924. Rehearing denied March 12, 1924.
An interest-bearing deposit which was actually a loan in this case was
changed to a noninterest-bearing deposit shortly before the failure of the
bank. It was held that this was a claim against the guaranty fund.
259 SW 678
Turkey State Bank, et al. v. Estelline State Bank, Commission of Appeals
of Texas, Section Ks May 27, 1925. The decision rendered in 259 SW 678 was
reversed. 272 sw 775
Guaranty State Bank, at al. v. Jaggers, Court of Civil Appeals of Texas
San Antonio, Dec. 23, 1927. An interest-bearing certificate of deposit paid
at maturity with the amount credited to a noninterest-bearing accoUnt lees
than 90 days before the bank's failure was claimed to be two transactions,
the latter being covered by the guaranty fund. The Court held that the
latter amount was not protected by the guaranty fund and could only be a
general claim on the bank. 1 SW 2d 943
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-4-
2.
g about three
Secured deposits by county changed to noninterest-bearin
officers
its
by
known
bank
of
ion
weeks prior to failure (but condit
be secured
could
bond
a
new
before
al
interv
to be insolvent) because of
Eastland
Chaplan, Commissioaer of Insurance ar7. Banking, et al. v.
Deposits
1924.
20,
March
Paso,
El
Texas,
of
County, Court of Civil Appeals
g
account
bearin
erestnonint
a
in
placed
were
bond
of the County secured by
a new
of
issue
the
ng
awaiti
while
e
failur
bank's
three weeks prior to the
closing.
bank's
the
of
time
the
to
up
made
were
ts
b:nd; and subsequent deposi
rs, was unknown
The insolvent state of the bank, while known to its office
ted by the
protec
not
were
ts
deposi
these
to the County. It was held that
guaranty fund. 260 SW 839
Banking,
Eastland County v. Chapman, Commissioner of Insurance and
on in
Decisi
1925.
28,
Oct.
B,
n
Commission of Appeals of Texas, Sectio
654
260 SW 889 reversed. 276 sw
and Banking,
Eastland County v. Chapman, Commissioner of Insurance
which were placed
Commission of Appeals of Texas, Jan.6, 1926_ The deposits
bank's failure
in a_noninterest-bearing account three weeks prior to the
uent deposits
were held to be unprotected by the guaranty fund. Subseq
protected by the
made up to the time cf the bank's closing were held to be
t. 278 SW 425
paymen
guaranty fund but no interest was allowable .for delay in
aw, under
3. Interest -bearing certificates which owner had tried to withdr
right to do so, and had been refused
of Civil
Farmers State Bank of Mineola, et al. v. Mincher, Court
deposit in
ring
st-bea
Appeals of Texas, Dallas, Nov. 15, 1924. An intere
failed,
bank
the
before
which the owner demanded payment several months
ted
protec
be
to
held
was
such payment request being refused by the bank,
by the guaranty fund. 267 SW 996
of Appeals
Mincher v. Farmers State Bank of Mineola, et al., Commission
reversed
was
996
SW
267
in
on
decisi
The
of Texas, Section A, Feb. 9, 1927.
had been
st
intere
which
t
on
deposi
a
was
on the ground that the transaction
aw
withdr
to
option
tor's
deposi
the
when
contracted to be paid, and that
bank,
the
of
debt
g
bearin
st
intere
an
became
d
it
without interest was refuse
1090
SW
290
t.
deposi
g
bearin
not a general noninterest-
)4.
bearing at
Secured deposits by school district changed to noninterestrequest of bank
Elmo Independent School District, Court of Civil
Thompson, et al.
g public funds for
Appeals of Texas, Waco, Jan. 8, 1925. The bank holdin
do so, but agreed
a school district decided that it no longer desired to
t pending
deposi
ing
to keep the funds as an unsecured Laictinterest-bear
not prowere
funds
their use in paying off bonds. It was hald that these
rer
treasu
its
and
tected by the guaranty fund since. ahe school district
SW
269
t.
deposi
g
had no authority to make an unsecured noninterest-bearin
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
868
lb
-55. Public funds deposited directly as noninterest-bearing nonsecured
deposits,
Bolton, et al. v. City of De Leon, Court of Civil Appeals, Eastland,
March 26, 1926. Deposits of the City placed by the Treasurer in the bank
as unsecured noninterest-bearing deposits were held to be protected by
the guaranty fund. 283 SW 213
Austin, State Banking Commissioner v. Bain, Court of Civil Appeals,
Waco, March 25, 1926. Public funds temporarily deposited by the tax
collector as unsecured noninterest-bearing deposits in a bank not the
designated depository were held to be protected by the guaranty fund.
283 SW 638
6. Cases of agreement not in force - attempt to evade law and have interest
paid
Farmers and Stockmen's State Bank, et al. v. Neufeld, Court or Civil
Appeals, Amarillo, April 21, 1926. A general checking account had borne
interest on the minimum balance for one year, but after that period no
agreement was in force and none was expected as to the interest-bearing
aspects of the account. It was held that this account was protected by
the guaranty fund. 284 SW 688
Farmers and Stockmen's State Bank, et al. v. Sweeney, Court of Civil
Appeals, Amarillo, April 21, 1926. The banker said he personally paid
interest on a portion of a sizable account. The Court held that this
was an attempt to evade a direct promise to pay interest and yet pay it,
and was not protected by the guaranty fund. 285 SW 930
7. Funds collected by the tax collector as taxes which were due him as
an individual but were deposited as public funds are:
a.
Noninterest-bearing deposits protected by the guaranty fund -
Austin State Banking Commissioner, et al. v. Fox, Court of Civil
Appeals, San Antonio, June 8, 1927. Rehearing denied July 2, 1927. Funds
of the tax collector(collected as taxes and originally deposited as public
funds) which included funds due him as his commission, were held to be
funds due him personally and therefore protected by the guaranty fund.
297 SW 341
Austin State Banking Commissioner, et al. v. Fox, Commission of
Appeals of Texas, Section A, Jan. 18, 1929. Decision rendered in 297 SW 341
upheld. 1 SW 2d 601
Austin Banking Commissioner v. WCary, Court of Civil Appeals of Texas,
Beaumont, June 25, 1927. The tax collector's assessment deposit including
a portion belonging to him as an individual as his commission was held to
be protected by the guaranty fund. 297 SW 1097
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-6b. Public funds if mixed with funds due the State Austin Banking Commissioner, et al. v. Kiser, Court of Civil Appeals
of Texas, El Paso, Oct. 29, 1925. On rehearing Nov. 19, 1925. The tax
collector had State funds on deposit in a depository bank which failed.
A Portion of these funds representing his commission had not been separated
from the deposit of public funds. It was held that the portion belonging
to the tax collector personally was an unsecured noninterest-bearing
deposit and protected by the guaranty fund. 277 SW 411
Ar44;42)-0,
Commission of Appeals of Texas,
ri
Commissione
Banking
Austin
irrieer-vc
of Appeals and supported by
Commission
by
the
held
was
It
Oct. 14, 1926.
had made no effort
tax
the
collector
since
that
Texas
of
the Supreme Court
it was still
account
separate
a
in
personally
him
due
amount
to deposit the
guaranty
the
by
covered
not
was
and
funds
deposited
State's
the
a part of
1082
SW
fund. 286
III.
Case re liquidation procedure
1. Sale of assets by Bank Commissioner, including stockholders' assessments
Houston National Exchange Bank v. Chapman, State Commissioner of
Insurance and Banking, Court of Civil Appeals of Texas, Galveston, May 15,
1924. A stockholder refused to pay his assessment on the ground that the
Bank Commissioner's action in selling the assets of the insolvent bank
(including the stockholders' assessments) was illegal. The action of the
District Court in rendering a judgment against the stockholder was affirmed.
263 SW 929
IV. Cases regarding the closing of the fund
1. Withdrawal from fund - or insured status of bonds
1NEOW.'Rua r Truitt company v. Austin Ilanicing ommi sioner, Supreme
Court of Texas, Feb. 3, 1926. A State bank and trust company was entitled
to change its system of guaranty deposits from that of the guaranty fund
to a bond security system, the latter being taken from the bank's own bond
portfolio. 280 SW 161
First State Bank, et al. v. Collier, Commission of Appeals of Texas,
Section Bp Feb. 5, 1930. The First State Bank of Paris had changed from
the guaranty fund to the bond security system and the depositors had accepted payments on the basis of the latter system. It was ruled that the
question of whether such change was legal was being raised at too late of
a date. The only question of legality could be whether the depositors
were given adequate notice. 23 SW (2d) 716 (On appeal from the Court of
Civil Appeals for the Sixth Supreme Judicial District.)
First State Bank, et al. v. Collier, Court of Civil Appeals of Texas,
Texarkana, April 18, 1930. Rehearing denied May 23, 1930. The question
vas raised as to the legality of the transfer to the bond security system.
It was held thatpalthough this was not actually consummated since the
bank was insolvent at the time of the transfer, the depositors could not
claim the benefits of the guaranty fund. 27 SW (2d1 319
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
a
-72.
Priority of payments to depositors and limit to assessments on banks
Lacy, et al. v. State Banking Board, et al.,Commission of Appeals of
Texas, Section B, Dec. 12, 1928. The depositors in the Commerical Guaranty
State Bank of Longview which failed prior to eight other banks in the
guaranty fund sued to receive payment of their guaranteed deposits prior
to the depositors in the subsequent bank failures. It was held that depositors of all banks should be paid 2E2 rata and as the guaranty fund became insolvent it was to be regarded as a trust fund. The provision of
the guaranty lay regarding priority merely applied to the establishment
of a claim. It was also held that no additional assessments could be
made against the banks. 11 SW (2d) 496
3. Priority of payments to banks withdrawing prior to Sept. 22,_ 1926
Lydeck v. State Banking Board of Texas, Commission of Appeals of
Texas, Section A, Jan. 23, 1929. The bank had voluntarily liquidated
and paid all depositors (prior to the date of closing of the Longview
Bank mentioned above) and claimed repayment of its share of the guaranty
fund (refund of assessments, etc.) in the umount existing prior to the
failure of the Longview Bank. It was held that all banks were creditors
with equal rights in the distribution of the assets of the defunct guaranty
fund. 12 SW (2d) 954
4. Priority of bank in insolvent condition prior to 1925 law
Smythe et al. v. Cochren, et al., Commission of Appeals of Texas,
Section Bp March 20, 1929. Depositors of the First State Bank, Belton
which was closed as a guaranty fund bank on Jan. 7, 1927 alleged that
the bank was in fact insolvent prior to Feb. 7, 1925 when the law permitting withdrawal from the guaranty fund was approved. It was held that
the depositors had no claim on the assets of the guaranty fund in preference to other claimants.
https://fraser.stlouisfed.org
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DIGESTS OF COURT DECISIONS BEARING ON THE DEPOSIT GUARANTY LAW TN TEXAS
From Second Decennial Digest, American Digest System, 1907 to 196, vol. 3
Banks and Banking: no decisions of pertinence to the deposit guaranty law
noted, but one item arising from failure of a participating bank follows.
(Tex.Civ.App.1916) Under authority of the comeissioner of banking, an action
to realize on assets may be maintained in the name of a bank in the handsof a
special agent appointed by such commissioner to wind up its affairs.--McWhirter
v. First State Bank of Amarillo, 182 S.W. 682.
From Third Decennial Digest, 1916 to 1926, vol. h
liey It - p.
(Tex. 1923) The Depositors' Guaranty Fund Act is to be interpreted and construed
by its own language and thatAaiiCcestitution, and not by reference to the
v, Hall, 251 S.W. 497, 113 Tex. 49.
Negotiable I struments Act.guaranty law must be liberally construed to
depositors'
Bank
(Tex.Com.App.1924)
accomplish paramount purpose.--Chapman v. Guaranty State bank, 267 S.W.690,
reversing judgment (Civ.App.) 259 S.W. 972.
(Tex. Com.App.1927) Bank depositorsf guaranty law (Vernon's Sayles 1 Ann. Civ.
St. 1914, arts. 445-517) should be liberally constfued to accomplish the purposes
intended, particularly in view of section 3, Fifal Title Revised Civil Statues,
specifically regliring such construction.--(Civ.App. 1925) Farmers State Bank of
Mineola v. Mincher, 267 S.W. 996, judgement reversed 290 S.W. 1090.
Banks and Banking Key 15, PP. 450-455. Portions of pp 450 and 455 and all of
intervening pages relate to cases under the guaranty fund law. (NOTE. Not
copied here. Volume used for direct reference when preparing sections of Texas
report to which cases a re pertinent. CW.)
Key 49, p. 483. (Tex. C4.v. App. 1923) When a bank became insolvent the
-ommissioner of insurance and banking was, under Vernon's Sayles' Ann. Civ.St.1914,
arts, 453-459, and 552, authorized to levy an assessment upon tje bank's stockholders, and, when he did so and the assessment against plaintiff was not paid,
the commissioner was authorized to offset the assessment against plaintiff's
deposit.-- ler County State Bank v. Rhodes, 256 S.W. 947.
ir-(
Pp. 148W, 485, 486, 487. (NOTE. Several cases on these pages, referring to
stockholder assessments, not copied here, but referred to when preparing
"
,'i'$7 its'"
yid'
adfli4t4Lptinent.)
1 *AA cases
4
Artilmegei5ss rep .t%
4.1....1-\
'AA
L;.0t1-0-°"
,
Key 63i, pp. 510 and 511. (NOTE. several cases, referring to administration of
insolvent banks, not copied here, but referred to when preparing =cpS of
kn
A ti4,4_, ea...
.,,jht bepertinent.) *ea--.,
calevd
ems ep7t o which
...-e—,
.,
Key 64, p. 513. (Tex.C. v.App.1922) Where the commissioner of insurance and banking
has taken charge of assetw of insolvent tank, and a newbanking corporation is formed,
which agrees to payoff and assume the insol ant bank's obligations, and by reason
of such agreement the assets are sold to the new corporation, and a report thereof
is made to the court and confirmed, the new beak is bound by the order of the court
to pay off the debts of the old corporation, under Rev.St. arts. 458-523.46e
Guaranty State Bank v. Hidalgo County Bank, 245 S.W. 1039.
Key 80. p. 539. (Tex. 1923) Under Rev.St.art 469, dividends on general creditor's
claim cannot be paid by the banking commissioner so long as a bank is in the process
of active liquidation without an order for this purpose from tie district court or
district judge pf the county to which the bank was located and transacting business.
Innes v. State Banking Board, 254 S.W. 117, 113 Tex. 300.
Pp. 540-541. (NOTE. Some cases not copied here also referred to ingeparing
on Texas guaranty fund).
report
III
L
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Federal Reserve Bank of St. Louis
DIGESTS OF COURT DECISIONS BEARING ON THE DEPOSIT GUARANTY LAW IN TEXAS - page 2
410
From Ourth Decennial Digest, American Digest System, 1926 to 1926, vol. 4
Banks and Banking Key It, p.jar.
Tex.Cop.App.1928. Where bank deposit guaranty fund was insolvent and law
providing herefor was repealed, commissioner was not required to pay depositors
of bank first failing in full to loss of depositors of other failing banks
(Bank Deposit Guaranty Law - Vernon's Ann.Civ.St. 1925, art. 448)--Lacy v.
State Banking Board, 11 S.W. 2d 496, 118 Tex. 91, followed in First Nat. Bank
v. State Banking Board, 11 S.W. 2d 505, 118 Tex. 99 and Lydick v. State Banking
Board of Texas, 11 S.W. 2d 505, 118 Tex. 168, rehearing denied 12 S.W. 2d 954,
118 Tex. 168.
Act repealing assessment provision for bank deposit guaranty fund, but saving
existing liability, authorized assessment for current year and not future assessment until all liabilities were liquidated (Gen. & Sp. Acts 40th Leg, 1927) c.12,
repealing Vernon(s Ann. Civ. St 1925, art 443.-- (NOTE - sale case references as
in above paragraph).
Tex. Civ.App. 1927. Guaranty Depositors Act must be construed by its own
language and that of Constitution... (NOTE, same references as par. following)
Btaranty Depositors Act should be liberally construed to protect bona fide
depositors.(,Rn. St. 1925, artw. 446-448; Rev. St. 1911, p. 1719, sec. 3).-Austin v. Fat'S.W. 341, affirmed (Com.App.1928) 1 S.W. 2d 601.
•
Banks and Banking Key 15, pp.
pages 805-808 relate to cases
here. Volume used for direct
to thich cases are pertinent.
•
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Federal Reserve Bank of St. Louis
804-808. Part of decisions on page 804 and all on
under the guaranty fund law. (NOTE. Not copied
reference when preparing sections of Texas report
CW.)
•
DECISICNS OF THE TEXAS SUPREME COURT
W. O. KIDDER V. ED. HALL, COMMISSIONER OF INSURANCE LND BANKING, et al.
No. 3866. Decided May 9, 1923. (251 S.W., 497).
2. - Same (Jurisdiction of Supreme Court) Discretion of Officei.
The Commissioner of Banking, in the allowance or rejection of
claims against an insolvent state bank taken under his control must exercise his judgment and discretion, and this, involving questions of fact,
is not subject to control by the Supreme Court through writ of mandamus.
(P. 55).
4. - Same - banking - Depositor - Purchaser or Draft.
One who has purchased, not by check against his own deposit, but
by payment of cash, the draft of a State bank upon another bank does not
thereby become a depositor in the bank drawing same when payment of the
draft, the drawer meantime having become insolvent, is refused by the drawee.
Not being an unsecured depositor, he has no right to require the State
Banking Board to protect his debt against the drawer by resort to the
(7}
State Guaranty Fund. Middlekauff v. State Banking Board, 111 Texas, 561,
distinguished. (Pp. 55-58).
•
TYLER COUNTY STATE BANK et al. v. JOHNSON. (No. 1011.)
(Court of Civil Appeals of Texas. Beaumont. Jan. 9, 1924).(JJ-7;441 Y-57,4
1. Banks end Banking - 15 - One who left bonds with bank for
safe-keeping held not a "depositor" within bank guaranty law.
One who left bonds with a bank for safe-keeping to be returned to
her on demand, was not a "depositor" within Complete Texes St. 1920, art.
Civ. ot. 1914, art. 486) providing for payment
486 (Vernon's Saylers'
of depositors out of guaranty funds, the relation in such case being thtt
of bailor and bailee, and not that of depositor and banker, or debtor and
creditor. (hd. Note.- For other definitions, see Words and Phrases, First
and Second Series, 1)epositor.)
2. Banks and banking - 15 - Bank's conversion of bonds left with
it for safe-keeping did not entitle owner to compensation out of guaranty
fund.
Bank's conversion of bonds, left with it for safe-keeping on the
advice of the commissioner of insurance and banking, that the bank had a
right to convert bonds, did not entitle owner to compensation out of guaranty
fund on theory that on such conversion owner became a depositor.
•
3. Banks and banking - 49 (4) - Owner of bonds converted by bank
not entitled to offset assessment made by commissioner of insurance and
banking against bank's liability for conversion.
Owner of bonds left with a bank for safe-keeping and converted
by the bank was not entitled to offset the assessment made by the commissioner
of insurance and banking against the bank's liability for conversion.
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Federal Reserve Bank of St. Louis
- 2-
410
CHAPMAN et al. v. SOUTHWEST NATIONAL BANK OF DALLAS. (No. 235)*
276 S.W.
p 731
(Court of Civil Appeals of Texas. Waco. June 18, 1925.
Rehearing 1)enied Oct. 8, 1925)
*(Writ of error refused Nov. 25, 1925)
2. Banks and banking - 15 - Bank held not to have made a
"Noninsterest-bearing, unsecured deposit" in another bank by giving it
credit on its overdrawn account.
National bank which, on authority of banking commissioner to
deposit a noninterest-bearing, unsecured deposit in another bank, took
00,000 of its own money and paid itself 00,000 on a 45,000 overdraft
it then held against such other bank, he ,d not to have made a deposit of
a "noninterest-bearing, unsecured dep
" of 00,000 in such bank, within
meaning of Rev. St. art. 486.
EASTLAND COUNTY v. CHAPMAN, Commissioner of Insurance and Banking
(Motions Nos. 6847 and 6859.)
277 S.W.
p 629
(Commission of appeals of lexas, Section B. Dec. 2, 1925)
1. Banks and banking - 15 - County funds, deposited in state
bank after agreement, held within depositors' guaranty fund.
•
Where county depository failed to furnish the required bond, and
agreed that county funds should be within depositors' guaranty fund, subsequet
deposits by county held to be general noninterest-bearing deposit within
state fund, and not a special deposit constituting a trust, notwithstanding
agreement was ultra vires and that bank knew public nature of deposit, in
absence of any show of attempted fraud against depositors' guaranty fund. '
TEXAS BANK & TRUST CO. v. AUSTIN, Banking Commissioner. (No. 4357.) 280 S.vi.
P 161
(Supreme Court of Texas. Feb. 3, 1926.)
2. - banks and banking - 15 - State bank and trust company entitled
to change system of guaranteeing deposits from guaranty to bond security
system.
Under Acts 31st Leg. (1909) 2nd Called Sess. c. 15 par. 1, now
Rev. St. 1925, art. 475, when construed in light of Rev. St. 1925, art 10, sub(3
6; Acts 36th Leg. (1919) c. 145, par. 1 (Vernon's Ann. Civ. St. Supp. 1922,
V•
arts. 2417-2435); Complete Texas. St. 1920, art. 2423; Rev. st. 1925, art.
trust
company
held
entitled
to
change
its system of
.
2529, state bank and
guaranteeing deposits from guaranty to bond security system on tendering to ‘j
banking commissioner a duly authorized application for such change and its
bonds of the United States, approved by county judge of company's domicile
and by banking commissioner, in an amount equal to ba 's capital stock.
_7,44.11,4,0
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-3
LACY et al. v. STATE BANKING BOARD et al. (No. 855 - 4933.)
11 S.W. (2d) 496
Commission of Appeals of Texas, Section B. Dec. 12, 1928.
7. Banks and banking - 15 - In absence of provision for contingency
whereby deposit guaranty fund was insufficient to pay depositors in full, law
will imply intention to dispense remnant of fund according to equitable
principles (Bank Deposit Guaranty Law (Vernon's Ann. Civ. St. 1925, arts
437-489))
Under Bank Deposit Guaranty Law (Vernon's Ann. Civ. St. 1925, arts.,
437-489), contemplating plan for full protection of all depositors secured
by a fund replenished from time to time through system of assessment of member
banks, law will imply into statute intention that remnant of insolvent deposit')
guaranty fund will be dispensed according to principles of equity, where contingency of insufficiency of funds to pay depositors was not provided for by
statute.
S. Banks and banking - 15 - Law establishing depositor's guaranty
fund does not create preference to depositors of bank first failing by way of
assignment or lien on any particular part of fund, but merely establishes
liability (Bank Deposit Guaranty Law (Vernon's Ann. Civ. St. 1925, art. 448)).
1110
Bank Deposit Guaranty Law (Vernon's Ann. Civ. St. 1925, art 448),
providing that depositors of banking corporation shall be paid in full out
of cash on hand if sufficient, and if not sufficient, remainder shall be paid
out of depositors' guaranty fund, merely indicates priority of right as to
maturity of claim for payment establishing liability, but not making same
payable out of any particular portion of funds nor providing for payment in full
to depositors of bank first failing exhausting fund and resulting in advantage
over other depositors of failed banks, and does not create preference by assignment or lien against fund.
9. Banks and banking - 4 - Nlere bank d eposit guaranty fund was
insolvent and law providing therefor was repealed, commissioner was not required to pay depositors of bank first failing in full to loss of depositors
of other failing banks (Bank Deposit Guaranty Law (Vernon's Ann. Civ. st.
1925, art. 448)).
Under Bank Deposit Guaranty Law (Vern's Ann. Civ. St. 1925, art. 448)/
providing for payment of claims to depositor of insolvent bank out of depositors
guaranty f und, banking commissioner was required to pay claims in orderly
method of administering law, which contemplated solvency of fund, ample reserve
and liberal power of assessment of member banks, but, when plan was made impossible
of further execution, the available fund Was insolvent, and law was repealed,
commissioner was required to act according to equitable principles applicable '
HY
to trust funds, and was not required to pay depositors bf bank first failing
if fund would thereby become exhausted to loss of depositors of other failing
banks entitled to equal protection.
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Federal Reserve Bank of St. Louis
-4
10. Assignments - 48 - Liens - 7 - Ordinary debtor promises to pay
creditors in order in which debts mature out of available funds, but no assignment or lien is created on existing funds.
Or dinory debtor promises as matter of law to pay creditors in
order in which their respective debts mature and out of any available funds
then on hand, but this does not create equitable assignment or lien on existing funds in favor of debt first maturing.
11. Insolvency -118 (1) - Insolvent estate is administered on
equitable principles, without preference as to priority of maturities of
debts.
On insolvency, estate is administered on equitable principles,
without preference as to priority of matured debts.
12.
insolvency - 118 (1) - Preferences come only by contact or
statute.
Preferences can only be created by contract or statute.
411
n for bank
17. Banks and banking - 4 - Act repealing assessment provisio
nt for
assessme
ed
y,
authoriz
deposit guaranty fund, but saving existing liabilit
ed
liquidat
were
ies
liabilit
current year and not future assessment until all
1925,
St.
Civ.
Ann.
Vernon's
g
(Gen. & Sp. Acts 40th Leg. (1927) c. 12, repealin
art. 443)Civ.
Gen. & Sp. Acts 40th Leg. (1927) c. 12, repealing Vernon's Ann.
deposit
bank
for
nt
assessme
St. 1925, art. 443, which authorized 2 per cent.
shouic
guaranty fund, but providing liability existing at time act takes effect,
deposit
guaranty
of
members
were
not be affected, contemplated that banks which
nt for current
system when repealing act took effect would be liable for assessme
assessments
annual
future
for
y
year, and did not contemplate contingent liabilit
e aliquidat
to
years
of
number
d
so as to authorize assessment over an unlimite
insolvent banks.
It appears that the banking board, acting by virtue of the power con
against all ban
ferred by the repealing act, has levied the maximum assessent
nts can
assessme
further
no
that
for the year 1927, and we are of the opinion
legally be made against them.
oner
The writ of mandamus should be refused, and the banking commissi
,
payments
rata
pro
of
plan
the
with
should be allowed to proceed in accordance
applying thereto all available funds in hand.
1103-5016)
LYDICK v. STATE. BANKING BOARD OF TEXAS (Motion No. 8347; No.
1929).
23,
Jan.
A.
Section
(Commission of Appeals of Texas,
12 S.W.
2d-954
1. Banks and banking - 15 - That claim against insolvent guaranty
preference (Rev.
fund accrued when fund was solvent held not to entitle it to
St. 1925, art. 445).
That claim of trustee for stockholders of bank in liquidation
payable under
against insolvent depositors' guaranty fund became due and
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Federal Reserve Bank of St. Louis
5
Rev. St. 1925, art. 445, at a time when guaranty fund was sufficient to pay
all lawful claims against it, did not entitle claim to preference over claims
of banks subsequently failing, but said claim was on equal footing with other
general claims subsequently accruing and was entitled to L,hare ratably with
such claims.
2. Banks and banking - 15 - Claims against depositors' guaranty
fund to depositors of insolvent bank doing business when another claim became payable held not entitled to preference over latter claim (Rev. St.
1925, arts. 369, 445, and 450, et seq.)
Under Rev. St. 1925, arts. 369, 450, et seq., claims against depositors' guaranty fund of depositors of bank which was actually insolvent
but which continued to do business as a going concern when another claim
against fund became payable under article 445, were not entitled to preference
over latter claim, since guaranty fund did not become charged with liability until
bank was closed and its affairs were taken in charge by banking commissioner.
UYTHE et al. v. COCHhAN et al. (No. 1030-5215).
/9 S4V(A4,11
Commission of Appeals of Texas, Section B. March 30, 1929
•
1. Banks and banking - 15 - Holders of secured deposits held
not to have vested right in entire depositors' guaranty fund (Gen. Laws 39th
Leg. (1925) C. 9).
Holders of secured deposits in bank ante-dating February 7, 1925, when
Gen. Laws 39th Leg. (1925) c. 9, authorizing bank to change its anty fund system
to bond security system, became effective, h&ve no vested right in the entire depositors' guaranty fund in the treasury on that date, which could not be
affected or impaired by such act.
2. Banks and banking - 15 - Actual insolvency of bank prior to date of
act authorising change from guaranty fund system held not to give secured depositors vested right in depositors' guaranty fund (Gen. Laws 39th Leg. (1925) C. 9).
Fact that bank was actually insolvent prior to February 7, 1925,
when Gen. Laws 39th L.eg. method of protecting its depositors from guaranty
fund system to bond security system, became effective, does not give secured
depositors in such bank prior to that date a vested right in the entire depositors' guaranty fund in treasury which could not be affected or impaired
by that act.
FIRST STATE BANK OF PARIS et al. v. A. COLLIER.
(No. 5387. Decided February 5, 1930. (23 S.W., 2nd Series, 716))
s44444,-/sA4/p40 31/
1. State Banks - Securing Depositors - Change from Guaranty Fund to
Bond security Plan - Insolvency and Liquidation - Estoppel to Deny Change Receipt of Payments under Latter Plan.
A state bank operating under the Guaranty Fund system (Act of May 12,
31st Leg., 2d Called Session, 406) attempted to change its method
Laws,
1909,
of protecting its depositors to the Bond Security Plan (Acts of Feb. 7, 1925
Laws, 39th Leg., pp. 24, 26). It became insolvent and was closed and its
https://fraser.stlouisfed.org
L.
Federal Reserve Bank of St. Louis
-6affairs liquidated by the Banking Commissioner. Unsecured depositors
received through the Banking Commissioner partial payments on their claims
out of the proceeds 4" sale of the bonds deposited for their security by the
bank under its changed (bond security) plan. They then sued for payment of
the balance out of the State Guaranty Fund, claiming that the bank had not
complied with the law in its attempted change from that to the Bond Security
system, that it was still under the former law when taken over by the Banking
Commissioner, and its affairs should be liquidated under such law. Held that I
plaintiffs, by receiving payments under the Bond Security system, were estoppe4
from questioning the validity of the proceedings by which the bank had changed
to that plan.
2. - Same - Questions Unanswered.
Plaintiffs being estopped from questioning the validity of the
proceedings by which the bank changed their protection as depositors from
the Guaranty Fund to the Bond Security system, it becomes unnecessary to
answer various questions certified as to whether it had complied with the
law in making such attempted change.
3. - Same - Election of Remedies.
•
Plaintiffs, unsecured depositors in an insolvent state bank, its
affairs being closed out by the state Banking Commissioner as one securing its
depositors under the Bond Deposit plan, by accepting payments on their claims
from the sales of the bonds deposited without objection to that method of
liquidating its affairs, were precluded by their election of such rededy from
afterwards asserting that the bank had not lawfully adopted that system and from
seeking further relief from the State Guaranty Fund under which it had done
business. They could not be entitled to protection by both methods at once.
4. - Same While the fruitless pursuit of a supposed, but nonexistent, remedy
does not constitute an election, this rule does not apply where a plaintiff received partial relief by pursuing one wholly inconsistent with his right to
further relief by another.
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Federal Reserve Bank of St. Louis
1928-1930
(1).
EDWIN LAC* ET AL. V. STATE BANKING BOARD FT AL
NO. 4958. DECIDED DECEMBER 12, 1928 (11 S.W., 2d Series, 496).
Summary of Division
1. State Banks--Insolvency--Guaranty Fund--Priority of Payment-Banking Board.
In view of the obvious intention of the State Banking Law to
protect equally by operation of the State Guaranty Fund depositors of
all insolvent member banks (Rev. Stats., 1925, Arts. 441-474) the
depositors of an insolvent bank whose claims against such fund had
been allowed did not acquire, under Art. 443, a lien or vested right
to priority of payment from such fund as against the depositors in
other member banks subsequently becoming insolvent, the law creating
such Guaranty Fund having been repealed and all assessments permitted
by law to supply it having been made, leaving the fund inadequate to
meet the claims of depositors in all the insolvent member banks. All
depositors entitled to protection from such fund should then share it
pro rata.
2. Same—Mandamus.
Mandamus
where the act
a trust fund,
on principles
ally.
will not issue to control official discretion, but only
is ministerial in its nature, and the distribution of
where insolvency has supervened should be determined
of equity analogous to trusts and administrations gener-
3. State Banks—Guaranty Fund--Statutory Construction.
Construing Articles 437, 439, 443-448, Rev. Stets., 1925, in th
light of the obvious purpose of the Act to protect all unsecured nonInterest-bearing deposits under the Guaranty Fund, no specific provision
being made for the situation of insufficiency of funds arising from
failure of the scheme and repeal of the jaw, it is to be implied that
in such contingency the remnant fund of the insolvent estate will be
dispensed according to the principles of equity. The provision in
Article 448 for immediate payment of the depositor out of funds immediately available contemplating only the case where there will ultimately
be funds to pay all in full. This gives the depositor first allowed no
priority of right to payment out of such available fund, but only a
priority in maturity of his claim.
4. Same--Banking Commissioner.
The Banking Commissioner, knowing the coming insufficiency of the
Guaranty Fund to pay all depositors entitled, was under no duty to pay
one whose claim was matured and approved, though funds were then available
therefor, to the prejudice of others who would clearly become entitled
also to participate in the distribution, but properly held the entire fund
for equitable distribution pro rata to all who should become entitled to
share in it.
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5.
5. Statutory Construction.
The intent of the framers of a statute is to be derived from
its construction as a whole. It is not proper to confine the attention
to the one section to be construed. Each part should be construed in
connection with every other pert or section, and the particular meaning
to be attached to any word or phrase is to be ascertained from the context. The language of Article 448 as to payment of a depositor out of
the Guaranty Fund can not be given an interpretation which would thwart
the general purpose of the Act by creating an inequality among depositors
equally entitled to the benefit of the statute.
6. Repealing Act—Further i:ssessments on Member Banks.
The saving clause in the repeal of Article 443, authorizing assessments for the Guaranty und against meaber banks (Act of Feb. 11, 1927,
Laws, 40th Leg., ch. 12) preserved the right only as such liability
existed at the time that Act took effect. It did not authorize annual
levy of two per cent assessments against them through a long period of
years until all insolvent banks are liquidated,—but only for the current
year.
(2)•
•
Quotations from pleadings of Plaintiffs.
"And shows to the Court that the Commercial Guaranty State Bank
of Longview, Texas, is a member of the Guaranty Fund Banking Business.
"And having become insolvent and unable to longer carry on its
affairs as a bank, did on the 29th day of September, 1926, voluntarily
cease to do business and went into the hands of the Banking Commissioner
for the purpose of liquidation.
080
•
"Shows to the Court that there is in the hands of the Banking board
the sum of t437,169.42, subject to be applied and paid to the depositors
of said bank whose deposits were non-interest bearing and unsecured.
"That there are claims of depositors of the Longview bank which
have been approved against the Guaranty Fund to the amount of approximately
t400,000.00; plaintiffs are not informed of the exact amount.
"Soon after the failure of the Longvier Bank, the Banking Gommissioncr
made one or more assessments against the banks in Texas that were members
of the Guaranty System and ordered them to pay to the Banking Board the
amount due from each Bank.
"This was done and the amount collected was, and is 0_37,169.32.
"That at the time the Longview Bank failed there was in the Guaranty
Fund the sums of 000,000.00 which was at once subject to be paid to the
guaranteed depositors of said Bank and Said Bank guaranteed depositors
had then a vested right to have said fund so paid to them.
"That after the failure of said Bank two emergency assessments were
made by the Banking Board to pay the uaranteed depositors of said Bank.
-t
60,708.76 j Aa-ko
"One producing
76,460.6
"One producing
.44
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Federal Reserve Bank of St. Louis
"Total
"To which add
137,169.42
_31/2400.0,10
437,169.4.
üI
t
,
-3-
"This amount should be applied to pay the guaranteed depositors
of said bank.
"That since the failure of the Longview Bank on the 29th of
September, 1926, other Banks belonging to the Guaranty System have
failed and left depositors who have claims in the aggregate to be
approved against the Guaranty Fund of many thousand dollars.
"The following list shows the names of the Banks f'ailing since
the failure of the Commercial Guaranty State Bank of Longview on
September 29, 1926, the place where located and the date of the
failure of each, and each of said Banks were operating under the
Guaranty Fund System.
"List of Guaranty Fund Banks failing subsequent to the Commercial Guaranty Bank, Longview, Texas, September 29th, 1926.
Date
111
Oct.
Nov.
Nov.
Nov.
Dec.
Dec.
Jan.
Jan.
Corporate Name
31/26
3/26
16/26
26/26
2/26
14/26
3/27
7/27
Commercial State Bank
Altoga State Bank
Farmers & Merchants St. Bk.
Guaranty State Bank, Trinidad
Farmers State Bank
Guaranty State Bank
Addison State Bank
First State Bank of Belton
Location
Cisco, Texas
AltGg,, Texas
Mt. Calm, Texas
Trinidad, Texas
Kemp, Texas
Gunter, Texas
Addison, Texas
Belton, Texas
•••
"The Banking Board have failed and refused to declare a dividend
and pay the money to the guaranteed de2ositors of the Longview Bank
and are now threatening to declare a dividend and pay out the money on
hand pro rata to the guaranteed depositors of the Longview Bank, together with the guaranteed depositors of all the other Banks that have
failed since the failure of the Longview Bank on September 29, 1926, and
unless restrained, will do so.
"If the guaranteed depositors of the Longview Bank are forced to
prorate with the depositors of Banks which have failed since it failed,
they will only receive about thirty per cent of their debts, and if they
do not have to prorate, they will be paid in full.
"When the Banking Commissioner made an assessment on the Banks
belonging to the Guaranty System to pay the protected depositors of the
Longview Bank and collected the money, then the guaranteed depositors of
the Longview Bank had a vested right to have the money so collected thu:
applied.
(3). Quotations from Statements of Respondents.
"That on the 29th day of September, 1926, the Commercial Guaranty
State B8111( of Longview was closed and placed in the hands of the Banking
Commissioner of Texas for liquidation; at the time it was closed for
liquidation it was insolvent and indebted to depositors whose deposits
were protected by the Depositors' Guaranty Fund in the sum of 4.21,951.88;
and after the closing of the Commercial Guaranty State Bank of Longview,
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•
the following named banks were closed and placed in the hands of the
BAnking Commissioner of Texas for liquidation, the date of their
closing, the name of the bank, and the amount each owed to depositors
whose deposits were portected by the Guaranty Fund being as follows:
Date
October 31, 1926,
November 3, 1926,
November 16, 1926
November 26, 1926
December 2, 1926
December 14, 1926
January 3, 1927
January 7, 1927
•
Name
Amount
Commercial State Bank, Cisco,
W137,329.19
Altoga State Bank, Altoga
31,908.04
Farmers & Merchants State Bank
of Mt. Calm, lexts
62,974.73
Guaranty State Bank, Trinidad
71,665.31
Farmers State Bank, Kemp, Texas
43,910.31
Guaranty State Bank, Gunter, Texas 101,326.49
Addison State Bank, Addison,
35,530.01
First State Bank of Belton,
109,179.78
making a total indebtedness of the aforesaid banks to their depositors
whose deposits were secured by the Depositors Guaranty Fund of
01,013,714.73.
"Respondents represent that on September 29, 1926, being the day and
date of the failure of the Commercial Guaranty State Bank, Longview,
Texas, there was in the Depositors' Guaranty Fund and available to pay
the depositors of said bank $346,460.09; that subsequent to September 21,
1926, and prior to the repeal of the Depositors' Guaranty Fund Law by
the Legislature of the State of Texas, the State Banking Board assessed
all banks operating under the Depositors' Guaranty Fund Law to the full
limit allowed by law, realizing from such assessments C146,726.85, thus
increasing the Guaranty Fund available to pay depositors of the aforesaid
failed banks to the sum of e493,186.94
"Respondents represent that since the Banking Commissioner took
possession of the Commercial Guaranty State Bank of Longview on September
29, 1926, there has been paid to each of the protected dep,.)sitors of said
bank, out of the cash on hand and available constituting the liquidating
fund of said bank, thirty (30%) per cent of their respective claims.
"Respondents represent that the Depositors' Guaranty Fund Law of the
State of Texas was repealed by the Legislature of said State on the 11th
day of February, 1927; that at the time said law was repealed, all banks
operating under the Guaranty Fund System had been assessmed to the full
limit allov,ed by law and were not subject to further assessment, and that
since the Depositors' Guaranty Fund Law has been repealed, there is no
way of restoring the Guaranty Fund or increasing the same, and tha+ said
fund is insolvent and unable to pay the depositors of the aforesaid tailed
banks in full, and that therefore, under the law, as Respondents construe the
same, the guaranty Fund on hand and available to pay the depositors of
the aforesaid failed banks should be pro-rated to and among all the depositors of all of said banks, and that such is the intention of respondents
unleSs otherwise ordered by this Honorable Court," and another plea not
necessary to be noticed.
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5
0
(4). Fron_Qpinion of Court.
The consideration involving, as it does, the disposition of a
trust fund where insolvency has supervened, it should be determined upon
principles of equity analogous to trusts and administrations generally.
This is indisputable, because of the actual insolvency of the statutory
fund and the repealing of the law whereby its restoration to solvency
Is doubtful, if not impossible. But, whether the consideration is to be
controlled by equitable principles or not, nevertheless if the relators
are entitled to preference in payment over other insolvent banks by
virtue of the statute, then the writ should issue at all events, for
equity will follow the law.
...
•
•
It is elementary that the intention of the makers of an instrument,
whether statute, contract, or testament, will control its interpretation.
If the act had spoken specifically with respect to the contingency of
insolvency and the distribution of a sum short of full protection to all
depositors, of course there would be an end of the controversy. No
construction of the statute would be permitted, as none would be needed.
But it is apparent there is no such specific provision for the situation
that has arisen through failure of the scheme and repeal of the statute.
The Legislature contemplated a plan providing for full protection of all
depositors secured by a fund replenished from time to time through a system
of assessments of member banks. They never for once, apparently, contemplated the exigency of an insufficiency of funds and provided for such
an emergency. On the other hand, they expressly provided for such an
emergency by a levy or assessment to secui-e the needed funds, thus to
accentuate the major purpose of full protection to all depositors. But,
not having made specific provision for the contingency that has arisen,
the law will imply into the statute the intention that under such circumstances the remnant fund of the insolvent estate will be dispensed according
to the principles of equity. Such an implication is justified, and even
made necessary, because all men are presumed to intend equity and fair
dealing, unless the contrary clearly ap:ears, and especially will such
implication be made when it is in keeping with the general expressed purpose of the instrument under consideration. Indisputably, payment in Ral
to relators, thus exhausting practically the entire fund in the hands of
the Board, is a material advantage to them over the other depositors of
failed banks and is tremendously unfair upon principles of equity, and
will in no event be enforced or even permitted unless the intention of such
preference is clear. The only languPge of the Act relied upon as making this
intention clear has already been quoted from Article 448. But, we are of
the opinion the language does not justify the contention, which is obviously
at variance with the general purpose of the law. To our minds, the language
does no more than indicate a priority of right as to maturity of claims for
payment. The language is: "The remainder shall be paid out of the Depositors' Guaranty Fund through the Banking Board." There is not one word
indicating an appropriation of any special fund or part of fund. The language
is merely the establishment of a liability and does not make the same payable
out of any particular portion of the fund. It is no more in legal effect
than the final establishment of the liability of the Depositors' Guaranty
Fund. It, of course, is to be implied that such liability is presently
payable, but there is lacking that essential intention creating a preference
by way of assignment or lien, either legal or equitable.
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Federal Reserve Bank of St. Louis
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6.0
We think the construction of the statute contended for by relator
is due largely, if not wholly, to a failure to distinguish between
priority of payment and preference in payment. The act does provide for
priority of payment of the depositors of banks in the order of their
liquidation, but by no process of reasoning or logic can such provision
be construed to mean that the depositors in any failed bank shall be
entitled to a preference in payment as against the claims of depositors
in other insolvent banks. The Legislature, in enacting this law, was
necessarily compelled to fix some definite time for the maturity of the
claims of depositors in insolvent banks as a means of instructing the
banking commissioner as to when such claims should be ripe for payment.
The provision in question was intended for this purpose and nothing more.
That it was not designed to give a preference in payment is clearly implied from the provision for immediate replenishment of the fund so as
to raise sufficient funds to pay in full the depositors in banks subsequently failing. In other words, the provision for the payment for
depositors in banks in the order of their liquidation was clearly upon
the theory that by the replenishment process sufficient funds would be
promptly forthcoming to give depositors in banks thereafter failing
the equal protection which the act had declared all were entitled to.
It appears that the Banking Board, acting by virtue of the power
conferred by the repealing act has levied the maximum assessment against
all banks for the year 1927, and we are of the opinion that no further
assessments can legally be made against them.
The writ of mandamus should be refused, and the Banking Commissioner
should be allowed to proceed in accordance with the plan of pro rata
payments, applying thereto all available funds in hand.
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Federal Reserve Bank of St. Louis
IPP
•
COMMISSIONERS OF INSURANCE AND BANKING, DATES OF APPOINTMENTS AND RESIGNATIONS
Date of
Date of
Name
Resignation
Appointment
Jan. 9, 1905
1/17/07
8/31/07
1/31/10
8/4/10
1/17/11
7/28/13
1/23/15
9/1/16
2/1/19
4/1/20
8/4/20
W. J. Clay
R. J. Milner
Thos. B. Love
Wm. E. Hawkins
F. C. Von Rosenberg
B. L. Gill
W. W. Collier
Jno. S. Patterson (killed)
Chas. O. Austin
Geo. Waverley Briggs
J. C. Chidsey
J. T. M 4111in
67/
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4, I
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43110E01/31/10
8/3/10
1/6/11
7/10/13
1/23/15
8/28/16
1/31/19
4/1/20
8/1/20
412-ti 3
d-J1
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Exoerpt from An ual Report of Commissioner of Insurance and Banking
pertaining to Banking for Fiscal Year Ending August 31, 1916
Hon. Jno. S. Patterson, who was the head of this Department from the
beginning of the year 1915, departed this life on August 29, 1916, as the
result of a pistol shot fired by T. R. Watson, president of the Farm2rs
and Merchants State Bank, Teague, Texas, at Mr. Patterson while he was in
the act of closing the said bank in the performance of his official duties
on the day previous to his death.
From letter of transmittal to the Governor, p. 3.
•
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August :30, 1955
MEMORANDUM
Dr. Warburton
TO:
FROM:
Helen Thompson
SUBJECT:
Sources and adequacy of information, Texas study pertaining
to deposit guaranty
Very little published information was located pertaining
to statistics necessary for an accurate study of the deposit guaranty
plan in Texas.
Reports of the Texas Commissioner of Insurance and Banking
only from 1916 through 1922. Data for years prior
available
were
obtained from reports of the Comptroller of the
were
and subsequent
Currency, schedules collected by the Fedemi Reserve Committee on
Bank, Group and Chain Banking, the Federal Reserve all bank series
and miscellaneous published statements. Accuracy of the latter is
questionable, and in many cases dates for which material was gathered
and tentatively assembled do not coincide.
•
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Federal Reserve Bank of St. Louis
•
September 20, 1955
MEMORANDUM
Dr. Warburton
TO:
FROM:
Helen Thompson
SUBJECT:
Sources of statistical data for Texas study anent deposit
guaranty.
Type of data
Reports of
Corn. of Ins.
& Banking
Assets & liabilities of all State
banks
Individual statements for
9-1-11, 9-4-12, 9-12-14
•
Bank failures
List of dissolved or in voluntary liquidation, 1911-1921
Number and deposits 1911-1926
Call statements, four dates per
year, September 30, 1905June 30, 1921
Depositors' Guaranty Fund
Balance in fund 8-1911 and
8-1912
Financial statements, 1914-21
Statement of assessments,
1911-21
Source
Congressional
Record 1/
1910/11-1913/14
1910/11-1920/21
F.R. Schedule
1920/21 (also for
each yr. in individual reports
1910/11 - 1911/12
1913/14 - 1920/21
1920/21 (also in each
report, 1913/14 1920/21
Deposits
1910/11 - 1920/21
State banks (total)
dep.)
rotected
Guaranteed banks
Private banks
National banks
411
Federal
Reserve
data
X
X
All bank
series
All bank F.R.
series
1/ Article published in Congressional Record, 73rd Congress, 1st session,
Volume 47, Part 4, p. 3332.
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Federal Reserve Bank of St. Louis
•
-2-
4
III
Type of data
New banks
List of, 1911-12, 1918-20/21
Number of banks
Guaranteed
Members Bond Secy. Sys.
Reports of
Corn. of Ins.
& Banking
Source
Congressional
Record 1/
1911/12,1918 1920/21
1910/11-1915/16
1911/12-1915/16,
1920/21
National banks
•
•
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Federal Reserve Bank of St. Louis
x
All bank
FR series
All bank
FR series
Private banks
State (total)
Federal
Reserve
data
1910/11 - 1920/21
September 20,
•
1955
MEMORANDUM
Dr. Warburton
TO:
FROM:
Helen Thompson
SUBJECT:
Statistical data published in Texas Reports of the Commissioner
of Insurance and Banking, Pertaining to Banking
Type of data
Assets & Liabilities of all State banks
Individual statements for September 1, 1911,
September 4, 1912 and September 12, 1914
Bank failures
List of dissolved or in voluntary liquidation,
1911-1921
Call statements, four dates per year,i/
September 30, 1905 - June 30, 1921
•
Depositors'
Resources
8-1912
Financial
Statement
Year of report
1910/11, 1911/12,
1913/14
1910/11 - 1920/21
1920/21
Guaranty Fund
and balance in fund for 8-1911 and
statements, 1914-1921
of assessments, 1911-21
1910/11 - 1911/12
1913/14 - 1920/21
1920/21 (also in each
report, 1913/14 through
1920/21)
Deposits
State banks, given in condensed statements for
four dates per year (Report for 1920/21 includes
all the statements from September 30, 1905 1910/11 - 1920/21
June 30, 1921)
Nev banks
List of, 1911-12, 1918-1920/21
Number of banks (for fiscal year ended August 31)
Guaranteed, 1911-12, 1914, 1916
Members of Bond Security System (list for 1912,
1914, 1916-21)
Total State Banks & Trust Companies
•
1910/11 - 1911/12,
1918-1920/21
1910/11 - 1915/16
1911/12,- 1915/16, 1920/21
1910/11 - 1920/21
1/ Also published for each year in the individual reports.
2/ Reports for 1910/11 - 1915/16 from The State Library, Austin, Texas.
Reports for 1918-1920/21 from Federal Reserve Library.
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Federal Reserve Bank of St. Louis
68
REPORT OF COMMISSIONER OF INSURANCE AND BANKING.
BOND SECURITY BANKS AND AMOUNT OF SECURITY REPRESENTED
BY THI,
AMOUNT OF CAPITAL STOCK.
No.
22
39
52
59
65
68
85
98
148
182
191
219
262
298
374
461
486
491
598
652
707
769
807
811
821
852
895
992
1027
1091
1165
1272
1327
Name.
First State Bank
Kirbyville State Bank
Wallis State Bank
First State Bank
Forreston State Bank
Citizens State Bank
New Ulm State Bank
Farmers State Bank
Sinton State Bank
First State Bank
Farmers and Merchants State Bank
First State Bank
Jackson County State Bank
Blessing State Bank
Merchants and Farmers State Rink
State Bank of Commerce
Van Horn State Bank
First State Bank
Levi Bank and Trust Company
Conch° Valley Loan and Trust CompanN
Coupland State Bank
Boyce State Bank
T. A. Hill State Bank
Texas Mate Bank and Trust Company
Kenney State Bank
Temple Trust Company
First State Bank
Fidelity Trust Company
Alice State Bank and Trust Company
Guardian Trust Company
Austwell State Bank
San Jacinto Trust Company
Security Trust Company
Location.
Capital
Moulton
Kirbyville
Wallis
Red Oak
Forreston
Maypearl
New Ulm
Pflugerville
Sinton
Bryson.
Carlton
Matador.
Edna
Blessing
Weatherford
Commerce..
Van Horn.
Savoy
Victoria
San Angelo
Coupland
Boyce
Weimar.
Austin
Kenney
Temple
Avalon
Houston
Alice
Houston
Austwell
Houston
Austin
I;
...._ ,...!....
60,000
40,0imi
30,0oo
20.lzs)
20,000
25.000
30,000
20.000
62,500
10,000
30,000
37,500
110.000
25,000
75,000
50,000
30,000
25,000
200,000
200 MOO
25.000
10,000
100.000
200,000
10,000
200,000
15.000
100,000
100,000
300,000
25,000
100.000
200,000
FINANCIAL STATEMENT OF DEPOSITORS' GUARANTY FUND.
Balance on hand August 31, 1921
Received during the year from newly incorporated institutions
Collected on annual premiums from banking institutions,
one-fourth of one per centum of average daily deposits
and one per centum subject to adjustment
Contributions to Guaranty Fund by member banks to replace
money advanced to pay depositors of failed banks
Dividends received from banks in liquidation to reimburse
member banks who advanced money to pay depositors
of failed banks
Miscellaneous collections
$ 2,451,780 80
29,088 75
432,569 23
5,428,065 78
222,777 32
9,753 64
Total
Refund to banks adjustment balance on basis of one per
centum of average daily deposits of November 1, 1921,
and refund during fiscal year of 1921 to banking institutions voluntarily liquidating
Paid depositors of failed banks
Dividends to member banks
Miscellaneous refunds
193.278
5,611,243
222,777
17,795
11
41
32
42
Balance
August 31, 1922, balance with State Treasurer
Demand deposits in Guaranty Fund subject to check by $ 499,098 38
State Banking Board
$ 2.029.842 88
Total
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
6,122,254 72
8,574,035 52
6,045.094 26
2,528,941 28
$ 2,528,941 26
•
DIVIDENDS,PER CENT OF
COLLECTED AND AMOUNT OF
FOR GUARANTY FUND, AMOUNT
22.
NT
31.19
ST
SSME
AUGU
ASSE
ID
OF
UNPA
ENT
TEM
STA
DIVIDENDS AND LEFT
Date.
Assessment
Collected.
Date.
Amount
Unpaid.
Interest.
Amount.
in81
collected from 633 bankingand
Jan. 22, 1912$ 55,807
Sept. 7, 1911-Assessment vent
16,742 35 $ 39.065 46
Harris County Bank
stitutions for the insol
$ 111,615 62 Dec. 17, 1912
s
Texa
Trust Co., Houston,
in12,328 11
1,369 79
collected from 652 bankingTexa
13.697 90 June 20, 1913
s
Mar. 20. 1912-Assessment
State Bank, Paige,
stitutions for the insolvent Pair
inng
banki
652
collected from
Dec. 6, 1911-Assessmentvent
4.000 00
4,000 00
First State Bank, Kopperl,
8,000 00 June 20, 1913 12,24
stitutions for the insol
6 73
Dec. 17, 1914
Texas
42
2
9,62
1915
27,
Aug.
lIez. 10, 1915 17,495 32
8,747 66
Dec. I. 1
inng
banki
802
from
8.74766
collected
Oct. 1 1
6,560 75
Aug. 3, 1914 --Assessmentvent
, Amarillo,
Bank
4,373 85
State
First
O.
64
insol
June
the
3
61,23
stitutions for
gap 2.003 'V
2Uá
Aug.
Texas
in801 29
collected from 714 bankingPeaNov.
Sept. II, 1914-Assessmentvent
600 98
600 97
Stonewall State Bank.
4,006 47 Sept.
stitutions for the insol
cock, Texas
inng
banki
713
from
ted
collec
Oct. 12. 1914-Assessment
3,656 85
nty State Bank, Long3,656 85 Nov. 9, 1916
stitutions for the insolvent Guara
branch. Texas
3.479 63
713 banking in6,566 801
from
ted
1915
collec
14,
Aug.
43
ment
6
sess
10,04
Oct. 13, 19I4-As
.Tex.
Garza State Bank, Garzang
stitutions for the insolvent
incollected from 779 banki
200.000 00
Aug. 29, 1916-Assessment
Texas Bank and Trust
200,000 00
stitutions for the insolvent West
Texas
io,
Jan. 30, 1919 12,307 88
Anton
San
any,
Comp
75
5
24,61
1919
•
I
Oct.
in6,153 93
collected from 754 banking
Aug. 8, 1920
11,077 10
Mar. 17, 1917-Assessment
7,384 73
rs and Merchants State
61.539 39 Aug. 9. 1921
stitutions for the insolvent Farme
Bank, Waco, Texas
inng
collected from 978 banki
Nov. 9. 1920-Assessmentvent
67,079 32
54
First State Bank, Tomball.
111,798 86 April 23, 19'21 44,719
stitutions for the insol
Texas
inng
banki
981
from
collected
Dec. 1, 1920-Assessment vent
'25,162 '27
First State Bank, Bettie,
25,162 27
stitutions for the insol
Texas
inng
banki
collected from 982
Dec. 13, 1920-Assessmentvent
54.746 14
07
First State Bank, Penelope.
82,119 21 Oct. '26. 1921 27,373
stitutions for the insol
Texas
inng
banki
984
from
ted
collec
Dec. 21, 1920-Assessment
44,689 33
33
ey State Bank, Turkey,
55,861 66 May 6, 19'22 11.172
stitutions for the insolvent Turk
Texas
inng
banki
collected from 982
Dec. 22, 1920-Assessment
57,571 06
State Bank, Henderson,
57,571 06
stitutions for the insolvent First
Texas
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Amount
Advanced
by
Guaranty
Fund.
Unpaid.
Per Cent
Paid.
65
10
50
100
85
100
65
Tota
85
40
33 1-3
'20
34 28
NCE AND BANKING.
REPORT OF COMMISSIONER OF INSURA
Dividends Paid.
CD
•
STATEMENT OF ASSESSMENT FOR GUARANTY FUND, AMOUNT COLLECTED AND AMOUNT OF DIVIDENDS, PER CENT OF
DIVIDENDS AND LEFT UNPAID AUGUST 31, 1922-ContInued.
Dividends Paid.
Date.
----- - - -
-- ---
Assessment
Collected.
-
Date.
Interest,
Amount.
3ec. 31, 1920-Assessment collected from 985 banking institutions for the insolvent Lecray Guaranty State Bank,
Leeray, Texas
$ 88.164 52 Nov. 30, 1921$ 8,816 45$ 79,348 07
an. 3, 1921-Assessment collected from 985 banking institutions for the insolvent Citizens State Bank, El
Campo, Texas
318,416 12 Oct. 26, 1921 31,832 38 286,583 74
an. 9, 1921-Assessment collected from 983 banking institutions for the insolvent Farmers Guaranty State
Bank, Jacksonville, Texas
146,591 45 Oct. 26, 1921 36,647 86 109,943 59
tar. 14, 1921-Assessment collected from 989 banking institutions for the insolvent First State Bank. Donna,
Texas
94,746 05 June 16, 1922 23,68651
71,059 54
far. 26, 1921--Assessment collected from 992 banking institutions for the insolvent Guaranty State 13ank,
Breckenridge, Texas
400,000 00
400,000 00..
far. 28, 1921-Assessment collected from 994 banking institutions for the insolvent Tyler County State Bank,
Woodville. Texas
350,700 94
....... 350,700 94
lay 14, 1921-Assessment collected from 985 banking institutions for the insolvent Texas State Bank,Farwell. Texsui
108,355 25
108.355 25
lay 30. 1921-Assessment collected from 985 banking institutions for the insolvent Guaranty State Bank, Sipe
Springs, Texas
226,447 31
226,447 31
une 29, 1921-Assessment collected from 986 banking institutions for the insolvent Guaranty State Bank,
Ranger, Texas
641,827 28
641,827 28
uly 16. 1921--Assessment collected from 988 banking institutions for the insolvent Denison Bank and Trust Co.,
Denison, Texas
250,000 00 May 6. 1922 60,000 00 190,000 II
uly 20, 1921-Assessment collected from 987 banking institutions for the insolvent Desdemona State Bank. and
Trust Co., Desdemona, Texas
296,130 97 ...
296.130 97
uly 20, 1921-Assessment collected from 987 banking institutions for the insolvent First Guaranty State Bank,
Desdemona, Texas
103,781 04
103,781 04
ug. 3, 1921-Assessment collected from 985 banking institutions for the insolvent Security State Bank and
Trust Co., Eastland, Texas
487,363 25
487,363 25
ug. 6, 1921-Assessment collected from 985 banking institutions for the insolvent Guaranty State Bank,
Humble, Texas
46,497 44 July 7, 1922 23,248 72
23,248 72
ug. 18, 1921-Assessment collected from 978 banking institutions for the insolvent Guaranty State Bank of
99,918 24
Cotton Ian Necessit Texas
99.918 24
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Amount
Advanced
by
Guaranty
Fund.
Unpaid.
Per Cent
Amount
Unpaid.
Paid.
10
0
90
10
25
0
75
20
24
151
76
.....
Sept. 7, 1921
Asse,nielit collected frotn 91.,2 bankang an
stitutions for the insolvent Citizens State Bank, Bullard,
57,791 62
Texas
Sept. 17, 1921--Assessment collected from 984 banking institutions for the insolvent First State Bank, Caddo,
12,129 38
Texas
Sept. 26, 1921- -Assessment collected from 983 banking institutions for the insolvent Guaranty State Bank, Olden,
107.717 20
Texas
Oct. 10, 1921--Assessment collected from 979 banking institutions for the insolvent First Guaranty State Bank,
30.812 49
Southmayde, Texas
Oct. 13, 1921—Assessment collected from 983 banking institutions for the insolvent First Guaranty State Bank,
51,774 64
Crystal Falls. Texas
inOct. 19, 1921—Assessment collected from 982 ban
stitutions for the insolvent First State Bank. KeUer,
25,000 00
Texas
Oct. 21, 1921—Assessment collected from 979 banking institutions for the insolvent Guaranty State Bank,
97,675 57
Troup, Texas
Oct. 27, 1921—Assessment collected from 978 banking institutions for the insolvent First Guaranty State Bank,
15,310 01
Elmo, Texas
Nov. 4, 1921—Assessment collected from 974 banking inMerchants
and
insolvent
Farmers
the
stitutions for
1,137,795 40
State Bank, Ranger, Texas
Nov. 12, 1921—Assessment collected from 974 banking institutions for the insolvent Breckenridge State Bank,
970.454 28
Breckenridge, Texas
Nov. 14, 1921—Assessment collected from 974 banking inWindom,
Bank,
State
First
insolvent
the
stitutions for
144,329 42
Texas
Nov. 15, 1921—Assessment collected from 971 banking institutions for the insolvent San Juan State Bank and
182,071 14
Trust Co., San Juan, Texas
Nov. 17, 1921—Assessment collected from 972 banking institutions for the insolvent First State Bank, De Leon,
114,778 17
Texas
Nov. 30, 1921—Assessment collected from 968 banking institutions for the insolvent Frankston State Bank,
21,860 83
Frankston, Texas
Dec. 27, 1921—Assessment collected from 963 banking institutions for the insolvent First Guaranty State Bank,
83,853 51
Collinsville, Texas
Dec. 28, 1921—Assessment collected from 964 banking inOakwood,
Bank,
State
First
insolvent
the
stitutions for
33,814 00
Texas
Jan. 3, 1922—Assessment collected from 964 banking institutions for the insolvent Citizens Guaranty State Bank
42,385 13
Manor, Texas
Jan. 4, 1922—Assessment collected from 961 banking institutions for the insolvent Woodville State Bank, Wood25,500 00
ville, Texas
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
57,791 62
12,129 38
107.717 20
30,812 49
0
51,774 64
25,000 00
rt
97,675 57
15,310 01
,137,795 40
970.454 28
144,329 42
1ts4
1 7 7.3 1 3•59
r 1,2 3 3.g 4
7 7 0 q 35
P 0 0.0 0 0.00
r 1,F 3 9 .7 g
-3,0 1.4 F (1757'(2
A:1 7 0, 3 7 q 5F5-
I-
4
TI
182,071 14
ArPP :7
.1' I
114,778 17
21,860
83,853 51
33,814
42.385 13
25,500 00
-
a
STATEMENT OF ASSESSMENT FOR GUARANTY FUND, AMOUNT COLLECTED AND AMOUNT OF DIVIDENDS, PER CENT OF
DIVIDENDS AND LEFT UNPAID AUGUST 31, 1922—Continued.
Date.
6, 1922 —Assessment collected from 960 banking inslit
for the IIISOIVent Guaranty State Hank, Dodge,
Texas
$ 27,083 2'2
Jan 11 , 1922- -Assessment collected from 958 banking institutions for the insolvent First State Bank, Bronte,
Texas
30,000 09
Jan. 17, HIM—Assessment collected from 955 banking institutions for the insolvent Golden State Bank, Golden,
Texas
7,500 00
Jan. 18. 1922—Assessment collected from 953 banking institutions for the insolvent Farmers State Bank, Princeton, Texas
32,422 26
Jan. 26. 1122—Assessment collected from 951 banking institutions for the insolvent Farmers State Bank and
224,012 27
Trust Co., Gorman, Texas
Feb. 1 , 1112—Assessment collected from 948 banking institutions for the insolvent Caddo Guaranty State Bank,
192,731 03
Caddo, Texas
Feb. 23. 1922—Assessment collected from 949 banking institutions for the insolvent First State Bank, Gary
47,777 75
Texas
Mar. 7, 19:2—Assessment collected from 949 banking institutions for the insolvent El Paso Bank and Trust Co.,
129,614 05
El Paso, Texas
April 15, 1922—Assesament collected from 951 banking institutions for the insolvent Traders State Bank, Cle200,000 00
burne, Texas
April 22, 1922—Assessment collected from 951 banking institutions for the insolvent Farmers and Merchants State
55065 33
Bank, Gustine, Texas
May 3, 1922—Assessment collected from 948 banking institutions for the insolvent Citizens Guaranty State
28,120 89
Bank, Hutchins. Texas
July 15. 1922—Assessment collected from 944 banking institutions for the insolvent Guaranty State Bank and
50,000 00
Trust Co., Cisco, Texas,.
Paid.
Amount.
Jan
Total
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
$8,644,628 78
Interest.
$ 27,083 22
30,00000
7,500 00
32.422 26
224,012 27
192.731 00
47,777 7
129.614 05
200.000 00
55,065 33
28.120 89
50.000 00
1170,741 88 /8,173,886 90
REPORT OF COMMISSIONER OF INSURANCE AND BANKING!
Amount
Unpaid.
Assessment
Collected.
Amount
Advanced
by
Guaranty
Fund.
Unpaid.
Per Cent
Dividends Paid.
Date.
Resources.
--- - -
Total...
Liabilities.
.apit11 stock
urplus
Indiyided profits
iue to banks and hankers
ndividual deposits
eying' deposits
ime deposits
emand deposits
'ashier's checks
ills payable and rediscounts
ertificates of deposit for money borrowed
nds deposited
ther liabilities
4111111111
60imatranwanpro..
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Dec. 31, 1921,
1004 Banks.
Mar. 10, 1922.
988 Banks.
May 5, 1922.
985 Banks.
June 30, 1922,
983 Banks.
—
...oans and discounts. personal or collateral
mans on real estate
iverdrafts
onds and stocks
cal estate, banking house
)ther real estate.
'urniture and fixtures
:ash and exchange....
luaranty fund
ssessment for guaranty fund
cceptances and bills of exchange
)ther resources
Total
Sept. 6, 1921,
1022 Banks.
$ 219,820,958 02$ 199,735,065 02$ 200,638,484 03$ 192,280,0
52 551 193,131.400 25
21,115,621 3
22,919,1727 56
21,820,393 54
21.550,003 18
22.036./21 08
1,190,626 66
1,265,185 88
1.125,289 89
954,602
31
1,081,198 92
20,011,975 01
18,713,776 08
17.739,18564
18.615,511 19
15.9I3.26908
8,058,345 09
7,443,461 04
7,152,163 31
7,368,830
47
7,567,910
92
3,180,961 26
3.548,333 80
4,086,373 II
3,702./22 84
4,021.245 97
4,404,583 33
4,285,987 14
4,198,782 05
4.178.648 47
4,103,291 45
57,068,249 66
60,956,724 II
62,593,162 77
58.071,597 29
51.945.570 95
2,581.220 45
2,558,227 44
2,938,667 92
2,817.929
2,804.477 12
2,569,250 32
3.321 ,'262 91
4,750,591 /5
5.606,637 56
5,714,463 08
8,601,047 00
9,217,706 44
5,598,303 76
3,147.805
37
1,411.757 09
2,161,035 15
942.758 60
1,254,856 61
1,361,024 26
1,403.837 94
$ 350,763.871 34$ 334,907,515 82$ 333,896,253 881 317,635,4
65 391 311,134,644 05
$ 49,102,200 II $ 47,597,200 00$ 46,880,200 00$ 45.350.20
0 00$ 45,075.200 00
15,161,826 15
14,953,163 47
14,680,435 07
14.037.321 93 .13,877.544 29
6,352,752 01
4,390,697 31
5,069,789 23
5,367,348 06
5,346.059 42
11,178,856 59
11,498,849 62
13.893,96759
11,487,180 14
9,969,485 95
190,813,818 16 184,729,926 70 191,918,173 25 179,621,9
23 21 173,500.917 60
7,363,155 06
7,353.419 60
7.689,554 79
10,134,497 71
10,100.608
25,328,561 41
24,402.015 28
25,343.941 56
21, 4,41a 49
22,166.761 28
632,761 93
1,199.929 09
674,207 03
599,853
91
513.549 82
2,865,951 15
8./25,842 46
3,325,975 41
3,378,689 49
2.456.385 46
33,876,985 69
23,750,507 21
20.273,908 94
20,104,477 33
21,874,56
3 00
843,683 67
338,299 64
194,678 67
125,339 64
142,720 50
5.811,75244
5.363,371 52
5,387,159 68
5,200,591 17
5,008,658
86
1,431,767 08
1.004.311 92
864,262 68
853,627 31
1,102,189 47
$ 350,763,891 34$ 334,907,515
821 333,898,253 gs 1 317,635,465 393 311,134,644
05
2.
al 7,
'OXIXATVa (INV a3NYUIISKI SO RZNOISSIEROD
1Ovroaag
FOLLOWING ARE CONDENSED STATEMENTS OF ALL BANKS FOR
THE DATES ON WHICH CALLS FOR STATEMENTS WERE MADE
FROM
AUGUST 31, 1921, TO AUGUST 31, 1022.
COMPARATIVE STATEMENT OF FINANCIAL CONDITION OF ALL RANKS AT LAST
OFFICIAL CALLS FOR FISCAL YEARS 1921 AND 1922.
Loans and discounts, personal or collateral
Loans on real estate
Overdrafts
Bonds and stocks
Real estate, banking house
Other real estate.
Furniture and fixtures
Cash and exchange
Guaranty fund.....
Assessment for guaranty fund
Acceptances and bills of exchange
Other resources
Total
1025 Banks and
Bank and Trust
Cos. Statement
of Condition
June 30, 1921.
983 Banks and
Bank and Trust
Cos. Statement
of Condition
June 30, 1922.
42 Less
Increase or
Decrease.
$ 227,677,019 47 1 193,131,400 251 34,545,619 22 Decrease
21,713,632 48
22,036,221 08
322,588 60 Increase
962.392 66
1 081 198 92
118,806 26 Increase
20,898,090 94
15,913,269 28
4,984,821 66 Decrease
8,767,482 66
7,567,910 92
1.199,571 74 Decrease
2,523,290 97
4,021.245 97
1,497,955 00 Increase
4.380,743 91
4,103,291 45
277,452 46 Decrease
52,789.178 72
51,945,570 95
843,607 77 Decrease
2,610,925 77
2;804,477 12
193,551 35 Increase
1,691,576 61
5.714,46308
4,022,886 47 Increase
5,564,992 24
1,411,757 09
4.153,235 15 Decrease
1,652,618 66
1,403,837 94
248,780 72 Decrease
$ 351.231,945 09 $ 311.134,644 058 40.097,301 04 Decrease
Liabilities.
Capital stock
Surplus ..
Undivided profits
....
Due to banks and bankers
Individual deposits
Savings deposits
Time deposits
Demand deposits
Cashier's checks
Bills payable and rediscounts
Certificates of deposit for money borrowed
Bonds deposited
Other liabilities
Total
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
$ 49.532,200 00 8 45,075,200 00$ 4,457,000 00 Decrease
15,277,600 65
13,877,544 29
1,400,056 36 Decrease
6.655,072 26
5,346,059 42
1,309,612 84 Decrease
10,691,659 92
9,969.485 95
722,173 97 Decrease
189,549.666 62
173,500,917 I
16,048.749 02 Decrease
8,170.591 03
10,100,608 40
1,930,017 37 Increase
26,829,565 18
22,166,761 28
4,462,803 90 Decrease
484,915 50
513.54928,634 32 Increase
2.636.439 68
2,456.385 46
180,054 22 Decrease
33.057,76818
21,874.563 00
11,183,205 16 Decrease
435,351 43
142,720 I
292,630 93 Decrease
6,187,608 96
5,008,658 86
1,178.950 10 Decrease
1,923,505 70
1.102.189 47
821,316 23 Decrease
i 351,231,945 09 $ 311,134,644 058 40,097,301 04 Decrease
-z 8:10
REPORT OF COMM ISSIONER OF INSURANCE AND BANKING.
Resources.
STATEMENT OF ASSESSMENT FOR GUARANTY FUND, AMt COLLECTED AND AMOUNT OF DIVIDENDS, PER CENT OF DIVIDENDS
AND LEFT-UNPAID AUGUST II, 1921.
Dividends Paid.
Hate
Assessment
Collected.
Date.
Amount
Amount
Advanced
by
Guaranty
Unpaid.
Fund..
Per Cent
Amount
Unpaid.
Interest
Paid.
181
g
1-3
Sept. 7, 1911-Assessment collected from 633 banking institutions for the insolvent Harris County Bank and Trust Co
Jan. 22, 1912 $ 55,807 81
1 louston, Texas
$11161562 Dec. 17, 1912 16,742 35 $ 39,065 46
65
Mar. 20. 191'2-Assessment collected from 652 banking institutions for tbe insolvent Paige State Bank, Paige, Texas
13,697 90 June '20, 1913
1,369 79
12,328 II
It
Dec. 6, 1911-Assessment collected from 652 banking institutions for the insolvent First State Bank, Kopper!. Texas .
8,000 00 June 20, 1913
4,000 00
4 ,000 1.00
50
he.. 17, 1914 12,246 73
Aug. '27, 1915
9,622 42
Dec. 10, 1915 17,495 32
Dec. 1, 1916
8,747 66
Aug. 3, 1914-Assessment collected from 802 banking instituOct. 1, 1918
8,747 66
tions for the insolvent First State Bank, Amarillo, Texas
61.233 64 June 6, 1919
4,373 85
6,560 75
100
2,003 23
Aug. 20, 1919
Sept. 11. 1914-Assessment collected from 714 banking instituNov. 9, 1916
801 29
tions for the insolvent Stonewall State Bank, Peacock, Tex
4,006 47 Sept. 26, 1917
600 97
600 98
85
Oct. 12, 1914 Assessment collected from 713 banking institutions for the insolvent Guaranty State Bank, Longbranch,
Texas
3,656 85 Nov. 9, 1916
3,656 85
100
Oct. 13, 1914 -Assessment collected from 713 banking institutions for the insolvent Garza State Bank, Garza, Texas
10,046 43 Aug. 14, 1915
6,566 80
3,479 63
65
Aug. 29. 1916-Assessment collected from 779 banking institutions for the insolvent West Texas Bank and Trust Co.,
San Antonio, Texas
200,000 00
. .
.
.........
200,000 00
Total Loss
Jan. 30, 1919 12,307 88
Mar. 17, 1917--Assessment collected from 754 banking instituOct. 1, 1919 24,615 75
tions for the insolvent Farmers and Merchants State Bank,
Aug. 8, 1920
6.15393
Waco, Texas
61,539. 341 Aug. 9, 1921
7,384 73
11,077.10
85
Nov. 9. 1920-Assessment collected from 978 banking institutions for the insolvent First State Bank, Tomball, Texas
111,798 86 April '23, 1921 44,719 54
67,079 32
40
Dec. 1, 1920-Assessment collected from 981 banking institutions for the insolvent First State Bank, Bettie, Texas
25,162 27
25,162 27
Dec. 13, 1920-Assessment collected from 982 bunking institutions for the insolvent First State Bank, Penelope. Texas
82,119 21
82,119 21
Dec. 21. 1920-Assessment collected from 98.4 banking institutions for the insolvent Turkey State Bank, Turkey, Texas
55,861 68
55,861 66
Dec. 22. 1920-Assessment collected from 982 banking institutions for the insolvent First State Bank, Henderson, Texas.
57,571 06
57.571 06
Dec. 31, 1920-Assessment collected from 985 banking Institutions for the insolvent loeray Guaranty State Bank,
Leeray, Texas
88,164 52
...... •...
88,164 52
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Federal Reserve Bank of St. Louis
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STATEMENT OF ASSESSMENT FOR GUARANTY FUND, AMOUNT COLLECTED AND AMOUNT OF DIVIDENDS, PER CENT OF DIVIDENDS
AND LEFT UNPAID AUGUST 31. 1921—Continued.
Jan. 3, 1921—Assessment collected from 985 bankin • instituLions for the insolvent Citizens State Bank, E Campo,
Texas
Jan 9, 1921—Assessment collected from 9/3:3 bankin • institutions for the insolvent Farmers Guaranty Stete Bank,
Jacksonville, Texas
Mar. 14, 1921—Assessment collected from 989 bankina institutions for the insolvent First State Bank, Donna. exas
Mar. 26, 1921—Assessment collected from 992 bankin institutions for the insolvent Guaranty State Bank, Brec enridge,
Texas
Mar. 28, 1921—Assessment collected from 994 bankinQ institutions for the insolvent Tyler County State Ban , Woodville, Texas....
May 14, 1921—Assessment collected from 985 bankin institutions for the insolvent Texas State Bank, Farwel, Texas...
May 30, 1921—Assessment collected from 985 banki g institutions for the insolvent Guaranty State Bank, Si Springs,
Texas
June '29. 1921—Assessment collected from 986 bankin institutions for the insolvent Guaranty State Bank, Ran er, Texas..
July 16, 1921—Ass.ssment collected from 988 bankin institutions for the insolvent Denison Bank and T ust Co.,
Denison, Texas
July '20, 192I—Assessment collected from 987 bankin institulions for the insolvent Desdemona State Bank a nd Trust
Co., Desdemona, Texas
July 20, 1921—Assessment collected from 987 bankin institulions for the insolvent First Guaranty State B nk, Desdemons, Texas
Total
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Federal Reserve Bank of St. Louis
$318,416 12
Interest
Paid.
Amount.
' $ 318.416 12..
146,591 45
146,591 45 .
94,746 05
94,746 05
400,000 00
400,000 00
350,700 94
350,700 94.
108,355 25
108,355 25
226,447 31
2'26,447 31
641,827 28
641 ,827 28..
250,000 00
250.000 00
296,130 97
296,130 97
10:3,781 04
103,781 04
3,831,47029
$247,964 56 93,583,505 73
34 28
REPORT OF COMMISSIONER OF INSURANCE
Amount
Unpaid.
Assessment
Collected.
Date.
Amount
Advanced
by
Guaranty
Fund.
Unpaid.
_
Per Cent
Dividends Paid.
Date
(borrowed from Texas State Library
amot.
1
in9.5.5)
biennialAepurt ui aae 6uperiateadent of Banking, (first such report) covering
period from August IT, 14.10 to Dec, a), 1906.
Remarks on inacequate provisions
First report under general banking law of 1905.
o deposit and
ici
rorIl
of
call
Has
summary
regarding savings tanas.
rone callatte
xg
discount, and separately for trust companies,
in 1905, and four i 1906. Also individual statements for same dates, as follows:
Sept. 20, 1905; Jan. 3, 1906; Apr. 2, 1906; Aug. 13, 1906; and Oct. 31, 1906.
Second Biennial Report of the Commissioner of Insurance ard Banking, for the years
pertaning to ban
PP. iv-vi. Describes circumstances of ach of eight closed barks in 1907 and 1908,
aeee re,e1 eta"' 14
a11
rIt'r' and der es tors raid i- full.
rancaein
00
•
ee ive
.
1 Uri
•
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•
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zr /eit: (
.x
itzvez
f (
ummission_
Firs Annua Repor cf'
ar 1910-11, parte, nin
:
y
the
for
Biennial Report;
1.aL ie.
474,;
14
/
4,.;, i2444
'
444723,
,:D•e-c 34)
/6
Expresses cone rn about lar -,e 'weber ui new ha-1(s, with as little
bcin star-Lid; i'dicated that a force of competent exam, ners i, hein built
seen-sts teat a f ,e chan-es ma- be needed n the :aikin code. Re depeattors
euaranty• fund, as follows:
•
"On August 31, 1911, at the end of the fiscal year, 633 bank corporatiora
actually engaged in busi_eess secured their nepositors under the terms,,provi
and regulaVons of the Depositors' Guaranty Fund. The total arount paid by
633 hanks to the State Bankinn Board aFaregates '485,h09.22, of which one-fee
or '1.21,382.10).„ is paid i- cash, the remaining three-fourths are credited to the
State 3ankina Board as cie7an,1 depos4 ts subject to check upon the order of said Boar
and tetal '36)!.026.78.
With the payments from three banks not opened for busienese, and the amou -'
-flrom nine banks in the state of liquidation or consolation, and the part e -!'
failed Harris County Bank and Trust Company, the State Bankin Pn^,-*ci Istc3 to
(P.
credit on August 31, 1911, the sun of A.95,685.67. "
ce.e. . e.. e_.
Then gives foree oira ie taiular for, witi amounts
Contire
system.
security
bond
the
that )j5 bank corporations have adopted
with
experience
thefirst
report
his
in
"I regret to have to incluee
bank in
failed
a
of
depositors
of
payment
the
in
Guarant: Fend in actual ,neraeion
was
bank
This
Houston.
of
Company
Trust
and
Balk
County
the case of the Ha-ris
Statc
throunh
1911,
7,
August
of
the
night
on
r
the
Commission
by
takee choge of
"-Bank Examiner John a. Woods, and or. August 10, 1911, Yr. John A. Alkins,
was appointed special aaent and assened charge under direetien of this DenaThe State Bankine Poard met, and, after Foin into the eeeorti of the bank':
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Federal Reserve Bank of St. Louis
•
condition, ar
Fund, and on t c
callec. It is the
bank as vapidly as
e 3
less than ;50 per c
contributire to the fund in order to restore
Notnin_ aheu., ti.
eromptly and cheerfully met." (P. 7).
Report has individual statements for a 1 operaein bents lor
iept. 1, 1911.
c claw.
Mond Annual Report of the Commissioner of Insurance and Benkine followine Third
Biennial Report, for the Year 1911-12, pertainin to banking.
•
•
as list of liquidatiens since 1905, noting that all were voluntary except the
eellowing: American Bank and Trust Co., Temple; the Harris County Benk and Trust
Houston; the First State Bank of Ravenna the 7ulch State Bank, Zulch; the
irst State Bank, Kppperl; and the Paige State Bank, Paige.
Notes that, the First State Bank and Trust Co, Waco, liquidated and took new
:harter under same name, in order to change from bond plan to guaranty fund plan.
Has three-page statement, regarding guarante .end.jemaxpiglutgertzt*x Fund balance
99 -317.76, of which 119,6143.03 wes ia cash and
August 31, 1112, was
1 f the 7arks had made payments so
Drying the year many ,
449,04.73 in deposits.
and
surplus
as adjusted to 1 percent of
that their initial 3 percent -f capital
- v-reee daily deposits (as was required after a year),'and refunds were made to
. Scree new banks paid in 3 percent of caeital and surplus, and a few increased
euch .:aymcnts because of increase in catal stock; mod refunds mere made to 20
bbnks lilleidated, consolidated or natieralized; and a few minor adjustments were made
e---rerteed banks of Haeris .
Also, fund itself had paid :::34.26 toward pay7e,e
.nt
e Lhe n ocial assepr7,
the
brink's
weendecaeye
(i.e.,
ounty dank and Trust
roceived
'c,
to
a76
re,
w
dividends
which
er
to covJr guaranteed deposits,
Also describes assessments to tle
page 9).
liquidation of its assets).
bank (Houston, Kopperl, and Paige,
iecnch
failed
depositors
fund made to pay
of the dividends to be credited as
te
because
kepbsepara
is
'Alat he accounting
here because they are also
nthted
jyalkibaoptf
(
esscts ar
ale •nsn
on. r
scr
a
Co-eissioner.
ehe
of
reports
1
=
1
=330=101144100
-iven n
'
Statements of the three failed banks at date of closing, and ae Jf Aug. 31:
worksheet
on
entries
Amcents of deposts checked with
are given (pp. 16-23).
Re cause of failure. "It is -terestine to note tat
pre ared by Carol Colver.
ar
the failure of all three of -diese banks was traceable to one common cause, towit:
Houston
Re
(e.
23).
cr
irresponsible head dominatirc a weak and confidin
until attempts to
the paper of the bank, which appeae ,
case: "So much
purposes,
fraudulent
for
there
collect it Agrl ,Thi, was shown to have been placce
made
entries
false
and
uncuvered,
many forgeries oi checks on depositors' accounts
slow..."
(p.
19)
been
has
lank
the arfiars of the
that the ',Jerk of closinE
President left before he could be apprehended (p. 20). Re Kopperl: Chief stockalso
holder pled guilty onto indictments and eas sentenced to four years. Cashier
Paige:
Re
21)
(p.
insolvent.
was
pleaded guilty to receiving deposits when 'rank
"...due to the act of the president in placine 19,000 of worthless paper inthe
.." (p. 1514x 21).
"—
Report rcorlmcnds increasein salar7 of the C(7,-,15_ssc-cr, additional author
r*ln
ni-12r'"
fce
e
anC
charters,
to hankim,: bbard re discretien ie erantine
Givcs idividaal statemw,ts for hanks oncrain• Sept.
https://fraser.stlouisfed.org
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Federal Reserve Bank of St. Louis
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the 7-.,.ara7t- frld fr(
5
r?Df 0.10-fourth of 1 perce-.t on the avoraze daily depo:7its as of November 1 each
Also otcs amendments 1•ermittin tl-,e Barking Board to rr,Taire
T'ai'.ft (II. b.).
bs to ocrcas the r caj.ta 7_ stock -Alen tot7,1_ denosits exceed acerta'n ratio
1!.)
T]alary of
to ci al, and providin:: incr,-,ase
NOTES re statistial data o
locr =t of page 3 al.T.17 to tf is report.
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Federal Reserve Bank of St. Louis
Journal of American Bankers
Excerpt from "The Bank Commissioners Said",
—
Association, July, 1921,
•
•
ty
_
mThe Texas
_ _ _Guaran
law James Shaw, Commissioner
-----In a review of the effects of the Texas guaranty
banks failed between Sept. 29,
of Banks for that state, shows that altogether nine
the law, with aggregate
1926, and Feb. 11, 1927, the date of the repeal of
office of the commissioner
the
t
which
guaranteed deposits of $1,050,000, agains
the depositors and
will have a little more than $400,000 to distribute among
tion will permit.
litiga
g
pendin
ed
creditors of the defunct institutions, provid
creditors of state banks
He observes: "The only thing that depositors and other
the liquidation of
can look to now to get their money in case of a failure is
It, therefore,
ment.
assess
'
the assets of the failed bank and the stockholders
in the system keep
is the duty of the Banking Commissioner to see that all banks
the assets and the
themselves in good condition so that in case of a failure
ities to depositors
stockholders' assessment will unquestionably pay all liabil
and other creditors." In his review Mr. Shaw also states:
have been 1560
"Since the state banking law was enacted in 1905 there
in operation in
charters granted and today there are but 740 state banks
have voluntarily liquidated,
Texas. Over half of the state banks chartered
failed outright. *** State banks
been converted into national banks, or have
on trial before the bar of
should realize as never before that they are
be largely of her own making.
public opinion in Texas and the verdict will
ision together with a safe and sane p
I believe that a strong system of superv
is the key to the
policy on the part of officers and directors of banks
following causes: (1) insituation. *** Banks fail from one or more of the
ive lines of criodit to a
competence of officers and f directors; (2) excess
embezzlement by officers
few customers; (3) carrying speculative lines; (4)
g show that failureF
or employees. The records of the Department of Bankin
ably."
are traceable to one or more of these causes almost invari
state, but there is every
In this, Texas is no different from any other
banking all over the United
reason to believe that the insistent demand for sound
officers will have most sa
sible
of respon
States.'reflected in the public declarations
satisfactory results. pp. 64-65.
•
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January, W2.")
THE SOUTHWESTERN BANKERS JOURNAL
GUARANTY FUND STATISTICS
By J. L. CHAPMAN, Commissioner of Banking
January 15, 1925
Twenty-one
3,998,440.75
$
Thirty-one
$ 4,277,587.49
8,276,028.24
Number of failures from Sept. 1st, 1920, to September 1st, 1921
Amount withdrawn from Guaranty Fund during this period
Number of failures from Sept. 1st, 1921, to Sept. 1st, 1922
Amount withdrawn from Guaranty Fund during this period
Total assessments from September 1st, 1920, to September 1st, 1922, for fifty-two banks
267,500.00
Twenty-six
$4,138,014.12
Dividends to Guaranty Fund from September 1, 1920, to September 1, 1922 (2 years)
Average failures per annum
Average cost per annum
September 1st, 1922
(Beginning of J. L. Chapman's Administration)
Estimated cost to Guaranty Fund for
Number of failures from September 1,
791,735.36
remaining eight
Eleven
1922, to September 1, 1923
Total of assessments, Sept. 1, 1922, to
Amount withdrawn from Guaranty
Jan. 15, 1925, including approximate
Fund during this period
$ 1,917,708.04
amounts for failures for which asNumber of failures from September 1,
4,595,400.61
sessments have not been levied
Eleven
1923, to September 1, 1924
Amount withdrawn from Guaranty
Fund during this period
$ 1,743,419.71
Dividends to the Guaranty Fund from
Total assessments from September 1,
September 1, 1922, to December 15,
1922, to September 1, 1924
3,661,127.75
2,450,344.95
1924
Eleven
Average failures per annum
Dividends to general creditors, other
$ 1,830,563.87
Average cost per annum
than the Guaranty Fund, during
Number of failures from September 1,
792,394.98
above period
Nine
1924, to January 15, 1925
Total dividends paid to all creditors
Amount withdrawn from Guaranty
3,242,739.93
by J. L. Chapman (in 2 years)
Fund during this period, only one
Cash on hand to be distributed, as of
quidation having been assessed for
467,845.85
balance on hand January 1, 1925
$ 142,537.50
to date
RECAPITULATION
Fifty-two
Number of failures from September 1st, 1920, to September 1st, 1922
Thirty-one
Number of failures from September 1st, 1922, to January 15th, 1925
$8,276,028.24
Assessments, Sept. 1, 1920, to Sept. 1, 1922.
Assessments from September 1, 1922, to January 15th, 1925, including approximate assessments
4,595,400.61
not yet levied
Dividends to Guaranty Fund from September 1, 1920, to September 1st, 1922
Dividends to Guaranty Fund from September 1, 1922, to December 15th, 1924
Cash on hand Jan. 1, 1925, to be distributed
ne
.
267,500.00
2,450,344.95
467,845.85
COMMENTS:
It will be seen from the foregoing that the cost to the
Guaranty Fund for failures was about half as great for the
last two years as for the two years previous, and the number
of failures were reduced from fifty-two to twenty-two in number. However, it is observed that there is an increase in
failures the last four and one-half months over any period
during the past thirty months. This is attributable to several
reasons, namely:
1. About four defalcations were discovered, some of which
had been in progress for years;
2. Better times proved to the banks as well as to this
Department that certain banks were really insolvent that
were thought, in the stringent period, might be revived
when better conditions would prevail;
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Federal Reserve Bank of St. Louis
3. The Department for the past twelve months has put on
much stronger and more rigid examinations, which, of necessity, have made the classification of notes show insolvency,
thus causing some banks to close;
4. Some banks were holding realty and cattle loans and
were disappointed in the reviving of prices, and either closed
on account of so much frozen paper, or became discouraged
and closed voluntarily.
The general situation is greatly improved, and eighty-five
per cent of the banks, perhaps, will show more cash as of
December 31st than in their history. Also hundreds of banks
are able to pay dividends.
With a few reorganizations and only a very few more
failures, the banking situation will be greatly clarified and
on splendid footing.
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RULE SIX
Whenever the Commissioner of Insurance and Banking shall close and take
possession of the assess and business of a Guaranty 'und Bank he shall immediately,
upon presentation and proof, pat, claims due by such bank, at the time of such
closing and taking possession, i(ri account of deposits protected by the Deposltors
Guaranty 'und; such pay lents shall be made from the Depositors guaranty Fund and
from such -portion of the cash possessed by such bank'3when closea or thereafter
derived from the liquidation of its assets, as may lawfully be used for that
purpose. 4hen any such bank shall be closed and taken possession of by said
'dommissioner he shall Lamediately prepare and submit to the State ranking Board
an estimate of the amount required from the Qepositors Guaranty Fund, to pay all
claims on account of deposits protected by said fund, in addition to the amount
of the cash belonging to the assets of the bank which can be made immediately
available and which may be lawfully used for that purpose. If such estimatebe
approved by the Board, or if it be increased or reduced in amount, it shall
immedkately draw an order upon the State Treasurer, as Bailee, to pay over to the
Commissioner of Insuran.e and Banking out of the cash heldby him as such Bailee
belonging to the Depositors Guaranty Fund the amount called for by said zartifimai
estimate as made by the Commissioner, or as increased or reduced by the Board, and
when such amount has been paid to tht eCommissioner he shall immediately proceed,
either personally or through a State Bank Examiner or Special Agent, to pay as
herein provided, upon presentation and proof mf all claims on account of deposits
lawfu ly proteoted by the Depositors Guaranty Fund. The amount payable on any
such claim shall be the amount due the depositor at the date of the closin: of the
bank on acco nt of his deposit protected by the Jepositors Guaranty Fund less the
indebtedness, if any, due and payable at the time of such closing, of such
depositor to the bank.
1-XLE NINE
Shen the affairs of a closed guaranty fund banks shall have been fully
liquidated and prior thereto, from time to time, as may be practicable, the state
"anking Board shall repay to the Guaranty Fund banks all cash in the hands of the
Commissioner of Insurance abd Banking, or under the control of the said board,
which has been derived from the liquidation of the assets of each guaranty fund
bank, to which the Depositors Guaranty rmnd is entitled by reason of its subrogation
to the rights of depositors whose claims have been paid therefrom, and any unused
portion of the cash paid ofer to the Commissioner of Insurance and Banking by the
State Treasurer for the payment of such claims, Pro rate in proportion to tl.e
amount contributed to the depositors guaranty fund by each such banks.
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Federal Reserve Bank of St. Louis
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COPY
Austin, Texas,
August 9, 1935.
Honorable Thomas B. Love,
Republic Bank Building,
Dallas, Texas.
Dear Senator Love:
With furtner reference to the request contained in your letter of August 2nd for information as to State banks
closed in Texas, I give you briefly the status of the liquidations by
years as follows:
•
In the year of 1926, there were fifteen banks
to close whicn were operating as Guaranty Fund beaks with a total individual deposits of 4:1,594,455.1i. Of this amount there has been paid
from the Guaranty Fund and by offset ;1,462,907.27. There remains in
these fifteen liquidations unpaid deposits of 4131,547.86, this being
the balances due depositor& which were classified as general dreditors
and not subject to payment from the Guaranty Fund.
We also had seven bond Security banks to
close in tae year 1926, with total deposits of 4073,687.57, of whioh
there has been paid from liquidation 0443,704.8:3. One of these seven
banks liquidated a 100%.
In the year 1927, and prior to the repeal of
the Guaranty Fund, we had two banks to close which were operating as
Guaranty Fund banks, having total deposits of $157,698.48. There v:as
paid to individual depositors subject to protection of the Guaranty
Fund 0149,629.99. The remaining unpaid deposits of 48,068.49 is represented bi unclaimed balances and depositors classified as general creditors.
We also had in tne year 1927, seven Bond Security banks to close with total deposits of ;510,827.45 which there has
,been paid from liquid:tion $153,876.83.
We also had in the year 1927, one bank to
(close after the repeal of the Guaranty Fund with deposits of t20,37.78 of
\which there has been paid from liTAdation 40,247.22.
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#2
In the year 1928, we had twelve Stete beaks to close
with total deposits of 42,367,996.90 of leach there has been paid from liquidation 4,537,993.04. e,e,,,leee Le,
In the year 1929, we had six State banks to close with
total deposits of ',576,142.28 of whir there has been paid from 1i4eidation
:577,777.29.
In the year 1950, we had thirteen Stete banks to close
witn total deposits of NI26,222.54 oferhicn there nes been paid from lieuidaee
tion :574,768.46.
In the year 1951, we bad twenty-five State beaks to
close with total deposits of $8,292,664.61 of which there has been paid from
liquidation $5,164,026.68.
111
In the year 1952, there were fifteen State banks to
close with total deposits of $1,269,285.62, of which there has been paid from
liquidation 279,575.07.
/
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You understand that in 1 majority of these liquidations
there are some remaining assets to be liquidated and there will be additional
dividends to be paid to all creditors.
In compiling the above figures I have not taken into
consideration reorganizations whereby a new bank is created and assumes ell
liabilities without loss to the depositore, whice we treat as over-night
reorganizations. I have given you only such banks that have come into the
Commissioner's hands and are being liquidLted by this Department.
I truA that the above is the information desired, und
wish to assure you that I would be glad to be of any ferther assistance to
you, and you may feel free to call on me at any time. When you are in Austin
I would be glad to neve tne opportunity of havieg a talk with you.
Sincerely yours,
SAPtap
•
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
J. A. Pratt,
1037 West 221
Austin, Tees
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Year
Assessment
0
1909
1910
—
0
1911
33,299.09
0
0
1913
-
1915
, 70,791.68
0
45,779.49
0
.
1910
17s 318.48
'34,085.90.
0
69,928.94_,
,
1917
73,783.77
1918
'A,160.90
60,404.54
0
0
1919
•
0
1920
'139,985.95
1921
1922
13,984.88
186,000.15
4,218,160.9
5,986,800.89
1923
53,714.64
1,322,601.66
1924
124,546.78
2,335,504.25
1925
143,772.88
5,772,317.32
1926
56,482.75
1927
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1,010,950.47
1,714.86
19,810.58
1,584,1A.08
16,653,869.14
7:9 /// • - 1
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Gross Contr. & Assessment
Lees Dividends Retd
Less Contributions Retd
Total Gty Fund Cost
4111
18,038,060.22
7,190,964.66
10,847,095.56
lt384,191.08
9,462,904.48
Guaranty Fund Deposits protected during entire life of Fund total
42,259,924,988.12, making a cost of ;;'.00422469 for tiae 'Boller Protection.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
(Not printed at Government expense)
44/
(tongressional Ile/cord
4
4,1
SEVENTY-THIRD CONGRESS, FIRST SESSION
1910
627
1911
-2 698
1912
744
-4
1913
849
7e.t_
1914
OF
-)
fig1
1915
778
1916
785
_21
1917
821
1918
FOR
TEXAS,
BANKING
4_ 838
FORMER COMMISSIONER OF INSURANCE AND
1919
_ 907
1920
ON GUARANTY OF DEPOSITS IN TEXAS STATE BANKS
984
1921
SIXTEEN YEARS OF GUARANTY OF DEPOSITS IN TEXAS STATE BANKS,
864
1922
JANUARY 1, 1910, To JANUARY 1, 1926
915
1923
: 911
7
(A statement based on official records compiled by Thomas B. 1924
Love, of Dallas, Tex., former commissioner of insurance and bank- 1925
81P
ing for Texas, and former Assistant Secretary of the Treasury.)
Thus the guaranty-fund banks increased from 515 at the beginwere
Texas
of
banks
the
of
all
nearly
1907
of
the
panic
During
ning in 1910 to 889 in 1925, a gain of over 72 percent.
forced to impose upon themselves the limit of paying to their
It will be found by striking an average that the deposits in 818
depositors only $10 in any one day; and, as a result, there was Texas banks were guaranteed under the law for each of the 16
much agitation for some system of safe and adequate protection years on an average.
of the depositors in the Texas State banks.
GROWTH IN DEPOSITS OF THE TEXAS GUARANTY FUND BANKS
In the fall of 1907 the Dallas News opened and led for more
than a year a brilliant fight for a depositors' guaranty fund law.
The amount of deposits in these guaranty-fund banks protected
and
then,
Texas
Hon. Thomas Mitchell Campbell was Governor of
by the law at the beginning of each of the 16 years was as follows:
I was commissioner of insurance and banking, and both of us did
$37. 857, 732
everything possible to promote such legislation. Hon. C. M. 1910
47. 058,812
1911
Cmeton, then a member of the Texas House of Representatives
49,835, 246
and now chief Justice of the supreme court, was the author of 1912
78.153,412
the depositors' guaranty fund law which was enacted by the 1913
73, 837,993
1914
legislature of 1909 and was put into operation January 1, 1910.
55. 059,627
1915
It has been repeatedly stated that the guaranty of bank deposits
74, 747,432
in Texas "proved a failure "; and in 1932 Mr. J. W. Pole, then 1916
123. 011, 538
1917
Comptroller of the Currency, testified before the House Banking
167,
868, 140
and Currency Committee that the Texas guaranty of deposits law 1918
l26.386,933
1919
resulted in a "deficit of $16,000,000." Mr. Pole was mistaken.
268. 970, 780
Every depositor in every guaranty-fund bank in Texas was paid in 1920
218, 185, 710
1921
full. There was no deficit, but a substantial surplus was dis179, 145, 391
1922
tributed among the banks when the fund was wound up.
201. 303,939
1923
This law remained in effective operation for exactly 16 years,
235, 553, 753
1924
or until January 1, 1926; and the undeniable official records show
241. 377,754
1925
that during the 16 years of its operation it protected absolutely,
It will be noted that these figures grew from $37,857,732 in 1910
without the loss of a penny to any depositor, all of the deposits in
several hundred Texas State banks (averaging more than 800 to $241,377,754 in 1925, a gain of more than 500 percent. It will
throughout the period), and that the cost of the guaranty to the likewise be noted that the average deposits per bank increased
banks averaged about fifty-five one hundredths of 1 percent on during the period from $73,510 at the beginning to $166.430 at the
their deposits for each year, or about $900 per year per bank; and end of the 16-year period, a gain of more than 125 percent. notthe records prove that these 800 and more State banks, during withstanding a gain during the same period of over 72 percent in
these 16 years when their depositors were absolutely guaranteed the number of banks.
against loss, yielded larger profits to their stockholders than did
GROWTH OF DEPOSITORS' GUARANTY FUND
the hundreds of national banks of Texas, which provided no such
The banking department records show that the amount of cash
guaranty for their depositors during the same period.
in the Texas bank guaranty fund at the end of each of the 16
Nominally, this law remained on the statute books until it
years involved was as follows:
was repealed in 1927; but it was effectually wrecked and rendered
$50, 032. 58
nugatory by the legislature of 1925, which passed an act provid- 1910
121, 442. 76
ing that any of the banks in the system, all of which had volun- 1911
135.238 31 •
tarily agreed to mutually guarantee the depositors of all, might 1912
176,986. 31,
be released from their obligation and quit the guaranty fund 1913
239, 544. 521
system by giving an indemnity bond for the protection of their 1914
260, 335. 32IC
1915
depositors.
247, 228.61
The question is asked: "Why was the law repealed?" The 1916
217,821.. 60
answer is that some of the larger banks in the system, which 1917
295, 891.04
were called upon to pay substantial assessments during the 1918
403. 403. 70
early years of the 1920's, became convinced that the guaranty 1919
463, 246. 28,
fund, which had built up their deposits and business, would be 1920
445. 738.08,
unnecessary to maintain their deposits in the future; and that 1921
347, 212.17
the
1922
by getting out of the system they could save the cost of
654,848.37.
guaranty, and add that much to the substantial profits they 1923
44r, 1126. 82
were earning after paying the cost of the guaranty. Conse- 1924
748(O9.78
quently they maneuvered the passage of the bill referred to 1925
permitting banks to quit the system, and immediately following
The average amount remaining in the fund was $384.972 at the
the passage of this act, the number of guaranty fund banks end of each of the 16 years. The records also significantly show
was reduced from 829 at the beginning of 1925 to 104 in 1926 that after the guaranty-fund law had been practically destroyed
by the legislature of 1925, the guaranty fund, as a result of reand to 34 in 1927.
It is significant that the State bankers, who led the movement coveries from liquidations of failed banks, continued to grow for
to dissolve the Texas guaranty fund system in 1925, are today several years, mounting to $928.434.57 for 1926; $1,041,562.79 for
heartily supporting the proposal to provide for a system of Fed- 1927, and $1,421,578.49 for 1928.
eral indemnity of depositors in all banks.
But the amount in the guaranty fund at the end of each year
reflected only a minor proportion of the relief afforded to deGROWTH IN NUMBERS OF THE TEXAS GUARANTY FUND BANKS
year, for during these 16 years the records
The records of the State banking department at Austin show positors during the
was paid to depositors in failed guaranty-fund
that the number of banks whose deposits were guaranteed by the show that there
a total of $17,670,520, or an average per year of
bank guaranty law, at the beginning of each of the 16 years banks in Texas
$1,104,408, being an average of $1,350 for each bank in the system
that the law operated were as follows:
Guaranty of Deposits in Texas State Banks
STATEMENT
THOMAS B. LOVE
4,
•e
•
174524-9398
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
2
CONGRESSIONAL RECORD
per year. These figures include payments made after 1925 on
account of liabilities which accrued while the system was in
operation.
THE COST OF DEPOSIT GUARANTY IN TEXAS
The amount of money paid to depositors in failed banks each
year is shown by the records to be as follows:
(I)
1910-----1911
(1)
1912
(1)
1913
(1)
..
(1)
1914
$35, 982. 93
1915
83,
018. 35
1916
1917
(1)
(1)
1918
123, 606.90
1919
227,
114. 54
1920
4, 450, 425. 58
1921
2, 726, 532. 22
1922
1, 522, 735. 77
1923
2,
159, 424. 81
1924
3, 797,021. 73
1925
974, 060. 54
1926
255, 677. 71
1930
314,919.00
1931
It will be noted that there were no losses and that nothing
was paid out for the first 5 years of the period of the fund's
existance, or until 1215; and also that nothing was paid cut during the years 1917 or 1918.
But we are told that this system of protecting depositors in
Texas State banks imposed an impossible coat burden upon the
banks in the system, and that the legislature of 1925 was justified
in wrecking the system by statute in order to relieve the banks of
this great burden, and recently I heard a Dallas business man tell
a legislative committee at Austin that if this bank guaranty law
had not been repealed it would have forced every bank in Texas
to close before now.
Let us see what this protection to depositors did cost the banks
in the system.
It is not difficult to ascertain precisely what it cost. The
banking department records show that the total gross amount
contributed by all the banks to the Texas depositors' guaranty
fund from first to last was $18,038,060.22, or an average of $1,127,379 per year for the 16-year period, or an average gross cost per
bank per year of $1,378.
But these figures show the gross cost from which must be deducted the refunds—the amount of the guaranty fund distributed
back to the banks as the liquidation of failed banks progressed,
which the records show were approximately $6,000,000, first and
last. Deducting this approximately $6,000,000 refunded to the
banks from the approximately $18,000,000 contributed in gross by
them, leaves as the net cost to the banks for the protection of the
depositors in guaranty-fund banks for the 16-year period approxi,Nothing.
174524--9398
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
mately $12,000,000, or an average net cost per year for all the
banks of approximately $914, or -a little over $75 per month.
It will be found that this cost averaged for the period a little
more than one half of 1 percent of the deposits guaranteed, or,
to be exact, fifty-five one hundredths of 1 percent plus.
GROWTH IN PROFITS AND SURPLUS O' TEXAS GUARANTY-FUND BANKS
During this 16-year period the capital surplus and undivided
profits of the guaranty-fund banks of Texas are shown by the
following table:
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
Capital
Surplus
$13,612, 503. 00
16, 519,000.(10
19, 174, 500. 00
21,882, 500. 00
26,345,500.00
25, 533, 000.00
25,057,000. 00
26, 510,500. 00
28,090, 125. 00
30, 472,000.90
34,787, 100.00
45, 408,500.00
44,8.52, 200.09
41, 574, 200.00
39,569,477. 18
38,370, 200.00
11,959,000.00
$1, 306,658. 53
1, 904, 444. 35
2,498, 935. 46
4, 270,499. 57
5,684,027. 83
5, 564, 213. 75
6, 989, 209. 38
6,276,029. 20
7,782,917.96
9,200, 117.30
10,964,000. 73
13, 626,975. 76
14,005, 236.63
12,150, 197.11
11, 516,967. 96
10,999, 536. 01
2, 582, 202. 81
Profits
$1, 193,094.21
1,536, 759. 14
2 176, 218. 21
2,209, 735. 36
2,812, 296.91
2, 364, 726. 71
2, 719, 980. 53
4, 199,832. 48
3,618, 391.01
3, 471, 707. 46
4, 248,890.07
7, 809,817. 37
3, 525, 520.96
5,897,632. 21
4, Cgs, 443. 00
3,790, 101. 20
901, 210. 32
GROWTH IN PROFITS COMPARED WITH THAT OF TEXAS NATIONAL BANKS
During the 16-year period the average surplus (including undivided profits) of the guaranty-fund banks of Texas, averaging
more than 800 in number, increased by more than 210 percent,
in addition to the dividends paid to their stockholders during
the period; and the percentage of surplus (including undivided
profits) to capital stock of the average guaranty-fund bank increased during the same period from 18.3 percent at the beginning
to 38.5 percent at the end, being more than doubled.
During the same 16-year period the records of the Comptroller
of the Currency show that the average surplus (including undivided profits) of the national banks of Texas, averaging. more than
500 in number for each year of the period, was increased by only
47 percent, aside from the dividends paid to stockholders during
the period and the percentage of surplus (including undivided
profits) to capital stock of the average Texas national bank decreased during the same period from 68 percent at the beginning
to 62 percent at the end.
THE RECORDS PROVE SUCCESS, NOT FAILURE
The above figures have been furnished me by the State Banking
Department of Texas and are undoubtedly authentic.
The depositors' guaranty-fund system in Texas was in no sense
a failure, but a striking success. It made the banks safe for the
depositors, and at the same time profitable for their stockholders.
•
'•
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ty of convicting bankers - interview with Mr. McAdams 10-,5-41
diffi
, "...Even when bankers signed statements admitting criminal violation of the state
blinking laws, members of the banking department tell me, that it was frequently
iipossible even tooiscure an indictment, let alone a conviction."
"A great deal of the trouble arose because the banking commissioner's lawful
duties ended when he had presented the evidence of violations of law to the courts.
The bankers had to be tried either in the county courts or in the district courts.
This meant that the county attorney had to prosecute the case. Usually the county
attorney or district attorney was interested in being reelected to that job or a
better one. Bankers are usually rather influential people in the community and it
became the practice for the county attorney Imximensmutti to determine the vigor
of his prosecution by the probable effect of such a prosecution on his election.
Since, under the guaranty fund plan, no depositors lostany money, they were not very
mad at bankers even when the bank failure came about as a result of simple fraud."
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Federal Reserve Bank of St. Louis
•
TEXAS - Notes from materials borrowed from Prof W. N. Peach - page 2
•
Interview with John M. Moore, 205 Nalle Bldg., Austin, Texas. 9/4/41
"Mr. Morre was in the Banking Dept. at the time of failure of the Guaranty
Fund. He said that the Guaranty Fund system was the brainpchild of Col. Love of
Dallas who borrowed it from the Nebraska law.
At that time bank examiners received $2400 per year & anyone 1,ho could read,
write &add could get a job as examiner. The jobs were used mainly to travel
looking for better jobs & make fine phrases about the integrity of scoundrels
running banks. At that time also every school-teacher started a little bank at
the cross roads - banks that soon failed. Examiner jobs were 'a social success'
according to Mr. Moore.
Durirg 1925, 1 26 & 1 27 the Banking Dept. sent more thieves to jail than at
any other time in the history of Texas.
Col. Love ICERXXXXXXiEd= sold the Guaranty system to state banks by permitting
them to count payments to the Fund as part of their capital structure--a wholly
unwarranted and 'un-legal, policy.
According to Yr. Moore one of the big factor's inthe failure of the First State
Bank of Eastland was a loan of some $25,000 to a railroad Which had already
surrendered its charter to the state of Texas."
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•
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
r.--&-t} 44 i_i$.07L,-4—' ,
I
-- I tIt-- e-V,,-4
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-/1--
From notes of W. N. Peach on Texas banking history
Following information is taken from the minutes of the State Banking
Board of Texas (official copy in files of State Banking Department) appropriate
dates of meetings are given below.
Thomas B. Love was Commissioner of Insurance and Banking when the
Guaranty Fund System went into effect and took the initiative in setting up
the administrative machinery of the System.
tI
At a meeting of the Board on October 28, 1909 the Cowboy State Bank
of Shafter Lake (Andrews County) applied for admission to the Guaranty Fund.
Such application was denied by the Board - stating that even though the bank
was solvent--nevertheless one Arlan B. Davis was not a proper officer within
the meaning of the law!!! in view of the repeated violations of the laws of
this State and of safe banking methods and practices in the conduct of said
bank!!!
At a meeting of the Board on December 22, 1909 - on motion of Mr. Love
the Board unanimously adopted a resolution to the effect that guaranty fund
banks "shall be deemed to be admitted upon the condition that it continue
solvent and properly officered ..." When Board found a bank not solvent or
not properly officered - board was to revoke certificate of authority to transact
the banking business.
On August 12, 1909 the Board met and adopted Rule Two to the effect
that when new banks joined the Guaranty Fund System they should pay to the
board in Austin Exchange 1/4 of the 3% of their capital and surplus to keep
the other 3/4 on deposit subject to withdrawal by check by the Banking Board.
This was obviously done in order to induce banks to join the Guaranty Fund
System. These accounts had to be set up actually on each bank's books.
At a meeting of the Board on April 12, 1911, the Union Bank and Trust
Co. of Houston applied for permission to quit the Guaranty Fund - to liquidate.
The Bank proved that all its depositors had been paid in full. The Board then
granted the request and returned to the Bank the $10,772.50 which it had paid
into the Board and gave the Bank credit for the $32,317.52 which the bank was
keeping on deposit subject to demand withdrawal by the Board.
N.B. This is the first bank that withdrew from the Guaranty Fund. This bank
(Union Bank & Trust Co.) had joined the Guaranty Fund on Dec. 23, 1909.
On Dec. 18, 1909 the American Bank & Trust Co. of San Antonio
was given permission to join the Guaranty Fund. The average daily deposits
of the bank for the year ending Nov. 1, 1909 were $318,902.29. The bank
therefore paid $797.25 in Austin Exchange to the Board and credited the Board
with $2,391.77 on its books subject to demand withdrawal by the Board.
gp
This episode is related because it is typical of what happened when
banks joined the Guaranty Fund. Same bank had ave. daily deposits of $393,996
for yr. ending Nov. 1, 1910 and paid Board $246.24 and gave Board credit for
additional $738.35. For yr. ending Nov. 1, 1911 same bank had average daily
deposits of $394,005.76 and paid board $246.25 in cash and increased Board's
demand deposit by $738.76. Same bank for year ending Nov. 10, 1912 had ay.
daily deposits of $400,911.86 - and paid Board $250.57 in cash & gave Board
credit for additional $751.71.
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Federal Reserve Bank of St. Louis
-2It is important to point out that the original assessments for the
- as well as later assessments - were paid 1/4 in cash and 3/4
Fund
Guaranty
by having member banks set up this amount to the credit of the Board on the
bank's books. The Board really never had more than 1/4 of the amount it
claimed to have.
The Hood County State Bank of Granbury - a guar. fund bank ed
& on April 4, 1913 the Board returned to the bank $132.60 - the
liquidat
bank's full cash contribution and gave the bank credit for ,the Board's deposit
of $397.78 which was on deposit with the bank (the other 3/4 of the bank's
assessment). This was the procedure followed when a bank liquidated and paid
all of its depositors.
On June 4, 1915 the American Bank & Trust Co. notified the Board that
it had voluntarily liquidated and that all depositors had been paid in full.
The bank applied for a refund of its contributions to the Guaranty Fund. On
September 10, 1915 the Board granted the request and returned the bank's full
contributions of $1,820.65 in cash and the $5,462.03 which the bank had on
deposit for the credit of the Board.
•
On March 13, 1916 the Board made a change of policy and granted the
Calvert State Bank of Calvert permission to change from a bond security bank
to the Guaranty fund plan. It was stated that a recent opinion of First Office
Assistant Attorney General C. M. Cureton had advised that a bank could change
from the bond plan to the guaranty plan by complying with the law in other
respects. Whereupon the Calvert State Bank paid the 1% assessment on average
at
daily deposits and was admitted to the Guaranty plan. Nothing was said
the
to
plan
guaranty
the
from
changing
of
this time about bank's desirous
to
bond plan. In a letter from Commissioner Patterson dated January 20, 1916
from
change
to
that
out
pointed
was
it
Bank,
State
Calvert
the Cashier of the
of
the bond plan to the guaranty plan it would be necessary for the board
nts. Some
directors of the bank to pass a resolution and to pay the assessme
is coantained
indication of official departmental policy toward the guaranty fund
nt
In the Commissioner's statement that "It is the opinion of this departme
Guaranty
be
that it would be to the best interests of all the State Banks if they
the
from
Fund Banks and within the last three weeks four banks have changed
adopted by
Bond Security plan to the Guaranty Fund plan." A resolution to be
stically
enthusia
was
the board of the bank was enclosed. Comm. John S. Patterson
to the
Bank
State
in favor of the guaranty plan and in a letter from the Calvert
with
read
have
"We
Commissioner (Jan. 18, 1916) the Cashier of the bank stated
as
and
Fund",
much interest your little booklet "Six Years of the Guaranty
the
we are thinking seriously of changing to that plan at some time during
to
how
ions
instruct
us
present year, we will appreciate it if you will send
make the desired change."
The board permitted banks to change from the bond plan to the
zing with a new
guaranty plan without surrendering its charter, and reorgani
required.
was
bank
the
of
board
charter. Only a resolution passed by the
on to change
permissi
given
was
Texas
The Burton State Bank of Burton,
).
(Minutes
1916.
17,
January
on
plan
from the bond plan to the guaranty
•
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Federal Reserve Bank of St. Louis
0
-3One of the reasons it is not possible to tell how much was lost in
state banks is because failed state banks were frequently bought by national
banks and the liabilities of the state banks assumed by the national bank.
In January, 1913, for example, the Haskell State Bank of Haskell, Texas was
forced into liquidation. Thereupon the Haskell National Bank assumed all the
liabilities of the failed state bank and paid its depositors in full.
On April 14, 1917 the Dimmit County State Bank of Carrizo Springs,
Texas was permitted by the Banking Board to change over from the Bond plan to
the Guaranty plan. On February 21, 1916 the Board passed a resolution requiring the First State Bank at Hale Center, Texas to increase its capital stock
by 25% within 60 days. This was done because the bank's average deposits
were $57,868.39 for the preceding year - its capital was $10,000 and the law
permitted a bank to have average daily deposits of not more than five times
the capital and surplus of the bank.
Cowboy State Bank later failed - i.e., after refusal of finking
Board to permit it to join guaranty fund.
The Cowboy State Bank closed its doors on July 22, 1913 - voluntarily
all depositors were paid in full.
•
On January 19, 1916 the Sour Lake State Bank of Sour Lake was ordered
by the Banking Board to increase its capital stock by 25% within 60 days. The
bank's capital stock was $15,000 average deposits for preceding year - were
$250,817. Bank's deposits exceeded capital and surplus of bank by more than
six times.
There were quite a number of banks during 1915 - 17 that liquidated,
paid depositors in full and received from the Banking Board their full contributions to the Guaranty Fund.
On May 26, 1916 the First State Bank of Port Lavaca was given permission to change from the bond security plan to the Guaranty Fund by resolution
of the State Banking Board.
When banks voluntarily liquidated, paid all depositors and applied
for a refund from the Guaranty Fund, the State Banking Board required such
that
banks to pay their pro rata share of the cost of paying other failed banks
Fund.
the
of
member
a
was
belonged to the Fund during the time such bank
given
On October 15, 1917 the First State Bank of Mart, Texas was
Board
of
Res.
plan.
guaranty
permission to change from the bond plan to the
given
was
Calvert
of
Bank
State
October 15, 1917. On March 13, 1916 the Union
similar permission.
reason When a guaranty bank left the guaranty plan - for whatever
fund
the
to
ons
contributi
its
bank
such
to
the State Banking Board, returned
while
banks
failed
of
account
on
ons
contributi
less the prorata part of its
it was a member.
In 1918 and 1919 a large number of banks were ordered to increase
their legal
their capital on grounds that their average deposits exceeded
limits.
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Federal Reserve Bank of St. Louis
-4-
•
At meeting of State Banking Board on April 23, 1919 it formally
approved a resolution requiring 89 state banks to increase their capital by
25% within 60 days. This was the largest single group of banks required to
do this by the Board. The Board was acting in pursuance to Art. 564 of the
Revised Statutes. Names and locations of the 89 banks are given in meeting of
Get Art. 564 and read it.
ithe Board for this day.
On November 25, 1921 the Banking Board - first time noted in the
minutes - rejected an application for a state bank at Old Glory, Texas on ground
that there was no public necessity for banking facilities in Old Glory at the
time.
On November 8, 1921 the First National Bank of Weatherford, the Bank
of Lipscomb, Lipscomb, Yanti's State Bank and Farmers State Bank of Quitaque
were denied their application to change from the Guaranty Fund to the Bond Security
Plan. This is the first notice in the minutes of such a request. The Board
unanimously rejected the request.
On same day 2 national banks were given authority to change to
state system. Mr. Hall was Commissioner at this time.
When the Guaranty Fund paid off depositors of a failed member bank,
the Fund then shared as a common creditor pro rata in the remaining assets of
the failed bank until it was repaid in full with 6% interest from day it
paid depositors.
It usually required from one to three months after a bank was closed
before depositors were finally paid by the Guaranty Fund.
On September 27, 1921 the Board refused application to charter a
$25,000 State bank at South Bend on grounds there was no public necessity.
During 1921 when there was an application to open a new bank, there was alway:an investigation to determine necessity, financial backing, character, etc.
of would-be incorporators.. On same day Board turned down application to
charter a new bank at Riverside. Public hearings were sometimes held before
the Board to determine necessity. On July 5, 1921 Board rejected application
for a new bank at Rockport on grounds there was no public necessity and on
same day rejected application for a new bank at Harlingen. On May 24, 1921
Board rejected application for a $10,000 bank at Belcherville. On May 5,
1921 Board rejected application for a new bank at Ennis, Texas. On April 26,
1921 Board rejected application for anew $10,000 bank at Wingate. While in
1921 the Board rejected several applications for charters for new banks, it
nevertheless approved many more applications. On April 18, 1921 Board rejected
application for new bank at Cisco.
On March 8, 1921 Board rejected application for new $10,000 bank at
Hartley in Hartley.
•
When people applied for a new bank charter a State Bank Examiner
made an investigation.
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Federal Reserve Bank of St. Louis
•
-5On January 4, 1921 - 24 banks were notified that they must increase
their ratio of capital to surplus within 6o days to bring it up to the legal
ratio.
On December 14, 1920 16 more banks were so notified - On December
1920 17 more were so notified.
7,
On December 7, 1920 the State Banking Board rejected an application
for a new state bank at Tomball, Harris County, with capital of $10,000. The
Examiner recommended against the application. Board was of unanimous opinion
that the proposed capital was inadequate and also objected to the personnel
of the proposed organization because two of the proposed incorporators were
Directors of the First State Bank of Tomball - which was officially closed
by the Dept. because of alleged embezzlement and mismanagement. The application - on motion of J. T. McMillin - Comm. - was formally and finally rejected.
On November 30, 1920 14 banks were ordered to increase their capital
within 60 days. And 46 more banks were so notified on November 16, 1920 Increase of 25% demanded. And 32 more on November 9, 1920.
•
During the latter part of 1920 there were a large number of applications for new state banks. In each instance there was an investigation; many
of the applications were refused. Whenever it appeared to the Board that there
was no need for new banking facilities in a town, applications were turned
down.
Sometimes the
it would be inclined to
a bank charter for Jean
the capital stock be at
at $10,000.
Board
favor
State
least
suggested that if more capital could be secured,
an application. E.g. on June 1. Board approved
Bank at Jean, Young County - but insisted that
$15,000. The organizers had planned to capitalize
On May 18, 1920 Banking Board rejected two applications for charters
for new banks.
When a member Bank of FDIC withdraws, does it get back its contributions? It seems to me that when insurance is paid, it is sufficient that
should
depositors are protected while the insurance is in effect and no refund
the
of
member
a
be made merely because the bank didn't fail while it was
Guaranty System. No insurance company returns premiums because the insured
person or thing doesn't die or be paid by the insurance company.
One of the reasons that made the Guaranty Fund plan less costly
was the double liability on bank stockholders during the period of the Fund.
Very frequently banks failed and the Fund paid out considerable amounts to
depositors. But after assessing stockholders the Fund was reimbursed.
•
On May 18, 1920 there were three separate applications for new
s
banks at Cross Plains - by three groups of individuals. The application
were held in abeyance.
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Federal Reserve Bank of St. Louis
-6On May 18, 1920 the Board granted a charter to a group of indiviof converting the Katy Bank, Unincoprorated (Katy-Harris County)
desirous
duals
into a State bank with capital stock of $25,000.
It might be worthwhile to go through the 1920-21 minutes of the
Banking Board and get all applications for charters - those granted and all
those rejected - Plot these and see if they were mainly from one section of
the State or if they were generally spread all over the State.
On May 4, 1920 the Board granted a charter for the Brazos State
Bank, Brazos (Palo Pinto Co.) with capital stock of $25,000. The new bank
was a conversion of the Brazos Bank, Unincorporated.
On the same day, however, the Board formally and finally rejected
the application to convert the Bank of Mathis, Unincorporated (Mathis, San
Patricio County) into the Guaranty State Bank, Mathis - with capital of $15,000.
The Board gave as its reason for rejecting the application the fact that in
the opinion of the Board, there existed no public necessity for additional
banking facilities at Mathis.
During 1920 there were a large number of applications rejected. It
might be well to get the names of these banks, towns, etc. size of proposed
banks, etc.
•
On April 27, 1920 the Houston Land and Trust Company (Houston)
which had been operating under a special charter, was granted permission to
become a state bank under name of The Houston Land and Trust Company - with
capital stock of $1,000,000 and surplus of $300,000. The new bank entered
as a guaranty fund bank.
On April 13, 1920 the Board rejected an application for a charter
for a new bank at Magnolia Park, Harris County on grounds that there was no
public necessity for banking facilities there at the time and "... also for the
additional reason that the proposed officers are not familiar with the
business of banking."
There is no reason to believe that banks desiring to adopt the Bond
security
Security Plan during 1920-21 were discriminated against. A few bond
chartered
was
Houston
Co.,
Trust
Jacinto
San
the
E.G.
chartered.
banks were
April 6, 1920 with capital stock of $100,000 as a bond security bank.
requesting
On April 1, 1920 the Banking Board passed a resolution
present and
a complete audit of the Guaranty Fund from its inception to the
resolved that this audit be incorporated into the minutes of the Board.
Find this audit - somewhere.
reproduced in
An audit from December 31, 1918 to March 31, 1920 is
also.
minutes for April 1, 1920. Make a copy of this audit -
4111,
On March 23, 1920 the board granted a charter for the Citizens
Guaranty State Bank, Rusk - Cherokee County with capital stock of $50,000.
The board had set a date for a public hearing since protests against the new
bank had been filed. The protests, however, were withdrawn, no protests
were offered at the public hearing. The Banking Board stated that inasmuch
as the banking situation in Rusk, and in Cherokee Co., was dominated by a
single interest, it appeared apparent to the board that a need for independent
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-7banking in Rusk existed.
the charter granted.
Hence the usual investigation was dispensed with and
The State Banking Board during 1920 and 1921 definitely tried to prevent the over-chartering of banks. When, in the Board's opinion, banking facilities
were already adequate or when there appeared to be no public necessity for
banking facilities - the Board rejected the applications.
It was the policy of the State Banking Board - so far as I am aware throughout its history - not to pay any depositors of closed banks until all
depositors protected by the Guaranty Fund had certified their accounts. When
the gross amount needed to pay all insured depositors was determined, the Commissioner of Insurance and Banking requested a lump sum - to pay all insured
depositors. This made it possible to determine the whole liability of the Fund
before any depositors were paid. It meant that depositors had to wait several
weeks, sometimes several months before being paid - but apparently this caused
no great outcry so long as depositors were sure that they would be paid in full
in not too long a time.
I
The Banking Board was apparently opposed to permitting State banks
to be controlled by national banks. On February 24, 1920 the Board approved
an application for a charter for the First State Bank at Bowie. However, the
Board sent the incorporators special instructions. The bank was to be capitalized
at $50,000 and five men were to subscribe $10,000 each. The Board required .
the five stockholders to severally and collectively promise that they would
not - within 24 months from the date of granting the charter - dispose of any
portion of their subscriptions of stock to a national bank in Bowie or any
person or persons interested directly or indirectly in any national bank in
Bowie.
While it would have been easy to evade such a promise and practically
impossible for the Board to discover the evasion - and the Board had no legal
authority to require such a promise or to enforce it - the promise was
apparently made.
On February 17, 1920 two groups of people applied for charters for
new state banks at Bowie, Texas. The Board suggested a pooling of interests
and organization of one new state bank. One group agreed to consolidate,
the other refused. The first group was given permission to organize a new bank.
The second group was given a public hearing. The main issue involved seems to
have been the independence from domination or control by existing national
banks in Bowie. One week later the second group was also given permission
to organize a new state bank. (See p. 23 of these notes).
•
With regard to the overchartering of banks in Texas, the writer is
informed that very frequently when there was a suspicion that some group
was about to organize a new state bank in some town already having a national
bank, the existing bank would rush an application to Austin and organize the
new bank for itself - to prevent the new competition.
It may be well to point out that the State Banking Board usually
met once a week.
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Federal Reserve Bank of St. Louis
At the meeting of the Board on February 3, 1920 19 banks were
•
-8ordered to increase their capital stock since the ratio of deposits to capital
was above the legal maximum.
Many national bankers organized state banks. e.g. at the February 3,
1920 it was noted that Mr. Tucker Royall of Palestine - a director of the City
National Bank of Dallas - wass the prime mover to organize the Farmers and
Merchants State Bank of Elkhart (Anderson County) with capital stock of $30,000.
See if the charter was granted.
On January 27, 1920 the Board rejected an application to charter the
Pickton State Bank $10,000 in Pickton - Hopkins County. There was a public
hearing - with proponents and opponents of the charter present. The Board
rejected the application on grounds of no public necessity for additional
banking facilities at Pickton - that there was no room for another bank to succeed
at Pickton and the application was not wholly devoid of prejudice. There had
been a fight between two factions of the community.
On January 13, 1920 meeting of Board - there was application to
charter the Liberty State Bank of Dallas with $100,000 capital. Board directed
an investigation to be made with respect to the followin : 1. Po ulation. 2 .
growth of t e
-5. Agricultur
Number of industries. 3. Financial growth.‘
bank. On same
the
to
establish
proposed
is
it
community and territory in which
day the board stated that it looked with disfavor on the application to organize
a new bank with capital stock of $30,000 at Thornton - Limestone County inasmuch as it would cost no more to revive the recently closed (insolvent)
Farmers Guaranty State Bank of Thornton. (14. Commerciarth.
At meeting of board on Manuary 6, 1920 recommended against granting
a charter for the proposed First State Bank of Jean on the ground that he
feared the proponents of the charter were not financially strong enough to
survive the recurrent drouths in that part of the State. The Board, however,
directed that final organization papers be sent the incorporators with a
recommendation that it was the board's impression that $10,000 was not perhaps
enough capital with which to start a banking institution under present
conditions.
On December 23, 1919 15 banks were directed to increase their capital
stock by at least 25 % since average deposits exceeded the legal maximum ratio
to capital stock.
On December 9, 1919 eleven banks were also required to increase their
capital stock by 25% for same reason as above.
On December 4, 1919 Board sent back an application to charter the
Guaranty State Bank of Weslaco, Hidalgo County - requiring additional information, giving the number of local incorporators and asking whether or not the
control of the bank would be centered in the community in which it is proposed
to operate.
On December 4, 1919 the charter for the Texas State Bank of Center
was approved in order that the new bank might convert the existing First
National Bank of Center into a state bank with capital stock of $50,000. The
incorporators were notified that when the charter was delivered the state bank
examiner would be instructed to charge off every piece of doubtful paper.
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Federal Reserve Bank of St. Louis
1
•
-9On December 4, 1919 the charter for the Texas State Bank of Center
was approved in order that the new bank might convert the existing First
National Bank of Center into a state bank with capital stock of $50,000.
The incorporators were notified that when the charter was lelivered the
state bank examiner would be instructed to charge off every piece of doubtful
paper.
At the meeting on November 22, 1919 the Commissioner (Mr. Briggs)
advised the Board that the Attorney General had just advised him that the amendment of the general corporation law enacted at the last session of the legislature removed the disabilities of married women as stockholders or incorporators
of State banks and, hence, the objections to the final organization papers of
the proposed Friona State Bank of Friona, growing out of the proposed ownership of stock in the institution by Mrs. M. M. Henschel - was no longer valid.
Hence the charter ($20,000 capital) was granted.
On November 21, 1919 - 15 banks were notified to increase their
capital stock by 25% within 60 days.
At same meeting the Board notified the applicants for a charter for
proposed Guaranty State Bank of Abiline that the Board did not look with favor
upon the organization because the Board believed the control of the bank should
be local to Abilene.
111
At same meeting the Board rejected application for the proposed
Guaranty State Bank of Strawn (Palo Pinto County - cap. stock of $50,000) on
following grounds 1. No necessity for additional banking facilities at Strawn.
2. Proposed organization embraces only one bona fide resident of Strawn. 3.
Applicants are not acting in good faith. 4. It would be impracticable to have
a local board of directors to manage the bank safely and prudently - since only
one organizer lived in Strawn. 5. The institution would obviously be a
failure and would endangerthe guaranty fund.
At meeting of November 6, 1919 Board refused application of charter
for proposed Guaranty State Bank of Graham with capital stock of $25,000 on
grounds the Board was not satisfied with the personnel of the organization.
n
On a number of occasions the Board granted charters with recommendatio
occasions
other
On
that the capital stock be increased before beginning business.
charter applications were rejected because in the opinion of the Board, the
proposed capital was insufficient. While it is certainly true that a large
number of new banks were being chartered during this period, it is also true
that a larger number were rejected. The difficulty was that the Banking
Board had no definite policy with regard to new charters - except what
appeared to them to be best under the circumstances. The Board just didn't
know when to refuse charters. When they were not satisfied with the personnel,
or when they felt sure the capital was too small - they took action but they
had no policy.
•
state
On October 21, 1919 Board rejected several applications for new
present
no
was
there
convinced
was
Board
the
since
banks at Jakehamon
even
necessity for banking facilities there - and since the townsite was not
began to take
a town but they would wait until it developed into a town and it
on the life and functions of a town.
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Federal Reserve Bank of St. Louis
-10•
On October 18, 1919 the Board refused charter for proposed Security
State Bank of Caddo with capital of $25,000. The Board itself had recently
investigated the situation in the oil fields personally and was convinced
there was no need for additional banking facilities.
On numerous occasions, when two factions from the same town applied
for separate charters for new banks, the Board used its influence to effect a
merger and have one larger bank organized. When such a consolidation of
interests could not be obtained the Board sometimes granted one charter and
denied the other - on other occasions they granted both charters.
Frequently when banks with capital of $10,000 were proposed the Board
re and
required that the $10,000 be net after paying for banking house, furnitu
the
of
case
the
in
fixtures. This was done, for example, on August 5, 1919
ns.
occasio
other
numerous
Smithfield State Bank of Smithfield. It was done on
At its meeting of August 2, 1919 the State Banking Board unanimously
The
adopted a procedure for handling applications for charters for new banks.
:
as
follows
zed
summari
be
complete resolution is found in the minutes. It may
send
to
d
require
was
n
ioner
1. Upon receipt of preliminary petitio the Commiss
the petitioner an application blank together with a questionnaire calling for
detailed information in regard to the community in which the proposed inr
stitution is to be located, and the financial responsibility and moral characte
the
to
d
returne
and
out
of the petitioners. This form was to be filled
of applicaCommissioner within 30 days. This was to constitute formal filing
out.
filled
y
properl
blanks
d
the
ioner
receive
tion - i.e. when the Commiss
Banking
State
the
before
ion
the
lay
applicat
to
2. The Commissioner was then
applicaBoard at its next regular meeting. 3. If the Board thought the
the
direct
motion
formal
by
it
shall
ration,
conside
tion merited further
of the
tion
examina
h
thoroug
a
make
to
nts)
his
assista
of
Commissioner (or one
it is
business of the community, and resources of the community in which
al
financi
the
of
tion
examina
careful
a
and
bank,
new
a
organize
proposed to
The
ners.
responsibility, banking experience and moral character of the petitio
Board
Banking
results of this investigation were then to be presented to the
If the Board
by the Commissioner at the next regular or special meeting. 4.
Commissioner
the
then approved the project, it was, by formal motion, to direct
to the
papers
ation
to send the application for charter and other final organiz
the
by
d
receive
incorporators. 5. When these papers wwere filled out and
the charter.
Commissioner - the Board - if still satisfied - was to grant
of the State
ments
6. If not satisifed that the application meets the require
the
reject
motion
banking laws - or policy - the Board shall - by formal
r.
therefo
charter and so notify the petitioners giving the reasons
rejected by the
It is important to note here that applications were
- but very
law
of
ments
Board not only because they did not meet the require
Board.
the
of
policy
frequently because they did not coincide with the
•
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Federal Reserve Bank of St. Louis
-11March 3, 1922 the Board approved application to charter the Guaranty
State Bank of Golden - Wood County - with capital of $10,000. At the same
meeting the Board was requested by the Commissioner to give him $7,500 to enable
him to pay this amount to the new banks, plus all the assets of the Golden
- which he had closed on Jan. 17, 1922 because of its
State Bank of Golden
insolvent condition. Mr. Priddie the acting commissioner argued that if the
failed bank were liquidated, losses to the Guaranty Fund would be substantially
The Board passed this resolution.
more than $7500,
On March 13, 1922 Commissioner Hall requested the Board to give him
$129,614.05 to pay over to the City National Bank of El Paso. In return the
City National Bank was to take over all the assets and liabilities of the
insolvent El Paso Bank & Trust Co. which had been closed by the Banking Department on March 7, 1922 because of its insolvent condition. The Commissioner
argued that liquidation of the insolvent bank would involve losses substantially
in excess of the $129,614.05. The Guaranty fund was to retain certain of *the
assets of the failed bank - including notes approximating $210,000; the 100%
assessment against the stockholders and a 1/2 undivided interest in $250,000
of notes - the other half being the property of the City National Bank of El Paso.
The Guaranty Fund was released of any further liability from the failed bank.
This request was granted.
•
The policy of selling out busted banks to other existing or newly
incorporated banks - to reduce losses to the Guaranty Fund apparently became
established practice. The notice of March 3, 1922 is the first instance to
come to my attention.
The minutes of the Board are full of bank failures, payments from
the Guaranty Fund, negotiations etc. during this period.
On March 21, 1922 - for example - it was noted that the failed
Bank of Keller had been taken over by the Guaranty State Bank of
State
First
Keller. Apparently the Guaranty State Bank assumed all liabilities of the
failed bank - and it cost the Guaranty Fund nothing.
On March 21, 1922 the Board approved a charter for the Farmers State
Bank, Olney (Young County) capital $30,000, surplus $6,000 to take over the
business of the Campbell Banking Company, a private banking institution.
•
The gross amounts paid out by the Guaranty Fund were much greater
than their net losses. When banks became insolvent, the Commissioner closed
the banks and audited the books to determine the amount of the non-interest
bearing and unsecured deposits. The cash in the bank was then used and the
liquidated
remainder was immediately paid out by the fund. When the bank was
other
with
rata
pro
and stockholder assessments collected, the fund shared
For
out.
paid
had
it
what
of
part
creditors and frequently recovered a large
Merchants
&
Farmers
the
closed
example, on November 4, 1921 the Commissioner
State Bank of Ranger. Total non-interest bearing and unsecured deposits
amount was
amounted to $1,137,795.40 which had to be paid by the fund. This
granted and paid by the Fund.
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Federal Reserve Bank of St. Louis
-12On April 10, 1922 the Board approved a charter for the Ranger
State Bank of RAnger with capital stock of $75,000.
On April 15, 1922 the Commissioner closed the Traders State Bank
of Cleburne because it was insolvent. On April 14 the Board granted a charter
for the Guaranty State Bank of Cleburne with capital of $100,000. On April 18,
1922 the Board agreed to pay the Guaranty State Bank $200,000 to take over the
assets and liabilities of the failed bank. This was done in order to avoid
greater losses to the guaranty fund. The Commissioner retained title to notes
(of the failed bank) aggregating $298,160.12 and the 100% assessment against
the stockholders.
This was bargaining in order to prevent the guaranty fund from losing
It seems that while the guaranty fund - by selling failed bank
money.
more
banks - did not lose as much as it otherwise would have lost other
to
assets
nevertheless - the losses to the communtiy were greater. This policy did not
prevent losses or make up for them - it shifted them to other people.
Sometimes when banks failed, the Department permitted the stockholders
to contribute additional funds and restore it to solvency and reopen. E. G.
The Live Oak County State Bank of Three Rivers failed on May 18, 1922 and was
given permission to reopen on June 24, 1922 because stockholders had made up
the losses and restored the bank to solvency.
•
On July 7, 1922 the Board appropriated $55,065.33 to pay depositors
the
of
failed Farmers & Merchants State Bank of Gustine. (Comanche County).
On the same day the Board approved a charter for the Guaranty State Bank, of
Gustine - with capital stock of $25,000.
It seems that almost every time a bank failed in a town, the Banking
Board approved application for a charter for a new bank in the same town - either
the same day - or within a few weeks.
•
It would be well to note how many banks voluntarily liquidated in
1920-21-22- and paid all their depositors without calling on the guaranty fund.
On August 16, 1922 it was noted that 4 state banks had nationalized
Many banks also merged during 1921. At the meeting of the Board on
Nov. 18, 1922 Commissioner Chapman pointed out - that in carrying out the
orders of the Board - the Commissioner would not have sufficient funds on hand
to pay the banks involved & that the withdrawal of the funds ordered by the Board
would leave a deficietcy in the permanent fund - unless restored - and would
on
leave assessments unpaid & the Commissioner would not have sufficient funds
involved.
hand to pay the non-interest bearing & unsecured deposits of the banks
He therefore requested - the request was granted - that when minor depletions
of the fund resulted by reason of insufficiency of former assessments arising
from
out of erroneous classification of claims and judgment of the courts or
s
other causes, that the Commissioner be authorized - when such deficiencie
assessments
accumulated so as to justify an assessment - to levy additional
existing
in order to maintain the Guaranty Fund in amount not less than that
on Jan. 1st preceding.
made
It is significant in this connection that special provision was
in the case of state banks taking out national charters. When such banks
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Federal Reserve Bank of St. Louis
•
-13
unused
portion of their contributions to the
requested a return of the
was
given power to withhold such amounts
guaranty fund, the Commissioner
fully
to
discharge all liabilities of such banks to the
as he thought necessary
from
insufficiency of former assessment or from any other
fund - resulting
source.
When state banks converted to national banks, it had been the practice
of the Board to withhold part of their interest in the guaranty fund to satisfy
assessments levied against them on account of banks failing after their conversion but before the filing of their dissolution papers with the State Banking
Dept. The Attorney General ruled that such banks were not liable to the fund after the date of their conversion for any failed banks - regardless of whether
or not dissolution papers had been filed or such conversion had been approved
by the Banking Dept. The Board therefore returned all such amounts withheld.
It may be well to point out here that state banks for the most part
were anxious to join the guaranty fund - either because they believed it workable
or because of the pressure from depositors - so long as assessments were relatively
small & only few banks were failing. When the depression of 1921 hit, however,
membership in the guaranty fund became very costly & many banks tried to get
out from under the increasing assessments. They tried 1st to convert to the
Bond Security System. When, by a bit of roundabout logic, the Banking Board
would not permit this, the state banks began to convert into national banks almost on a wholesale scale.
The Texas double liability clause meant that stockholders of record
and those who had transferred their stock within 12 months prior to the closing
of a bank - were liable. The Banking Board frequently levied such assessments.
See how successful the Board was in collecting.
In considering the exodus from the state to national systems during
this period, it is necessary also to include mergers of state banks by national
banks.
On Jan. 16, 1923 the Board granted a charter to the Commercial State
Bank, Dallas - Cap. $200,000 & surplus $20,000. Two state bank examiners,
assigned to investigate the proposition recommended against granting the charter
The board made further investigation and .. "having been presented with a list
of one hundred fifty stockholders who were, in the main, men of good repute
and large financial responsiblity, they concluded that while no public necessity
existed, that there was room for another bank in Dallas, and that this one would
be successful. "Therefore the charter was granted. On Jan. 29, 1923 the charter
was formally approved.
At the meeting on Feb. 7, 1923 the Board reconsidered the application
with capitr-..of W. J. Moore & associates to organize the Moore State Bank of Llano
of $50,000. Mr. Moore was present. He planned to have the new bank take over
the assets of the Moore Banking Company, unincorporated. The board agreed to
grant the charter provided the Examiners found Mr. Moore's banking experience
to be
was satisfactory - & provided they could agree on the value of the notes
taken into the new bank & the value at which the banking house, furniture &
fixtures would be taken into the bank.
recommendaOn March 16, 1923 the charter was granted over the adverse
tion of two examiners.
This would have been a good trick if it had worked. Meeting of
Feb. 16, 1923.
(Runnels
It was proposed to organize the Guaranty State Bank of Miles
the
over
take
to
of $20,000
Co.) with capital stock of $75,000 & surplus
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Federal Reserve Bank of St. Louis
-14Miles National Bank. An examination revealed that the assets of the national
bank were not acceptable to the Banking Board & the application for charter
was refused.
It would have been a good trick to convert a busted national bank
into a state bank as a member of the guaranty fund & let the fund pay the
depositors.
On Oct. 2, 1923 the men from Miles were back with their application.
The Board rejected it again.
The practice of negotiating & selling assets of busted guaranty banks
to newly organized or existing banks became widespread & continued at least
through 1923. This practice was adopted in order to reduce losses to the guaranty
fund.
Most of the banks converting to the national system in 1923 seem to
have been small banks, widely separated.
On Nov. 8, 1923 the Board refused application to charter the First
State Bank of Booker, Texas. It was pointed out by the Board that the populaticbn
of the town was only 500 people & that there was already a national bank in
the town. The Board felt the town could not support another bank.
Voluntary liquidations were of great importance.
Almost without exception, banks organized between 1910 & 1923 were
guaranty fund banks. However, the Republic Trust & Savings Bank, Dallas approved Nov. 22, 1923 - with cap. of $500,000 - was operated on the bond
security plan. "It was clearly shown that the incorporators were men of integrity and worth ..."
On Dec. 4, 1923 the same group of men were back from Booker with
application to organize a state bank there. Board ordered an investigation.
Many times the Board granted charters for new banks for the specific
purpose of taking over a busted guaranty bank in the town - frequently without
cost to the Guaranty Fund. For example, this was done by action of the Board
on Feb. 6, 1924 when it gave charter to the Security State Bank at Alice, Texas
with cap. of $50,000 on condition that the Commissioner was to close the
Guaranty State Bank of Alice & the new bank was to take over the assets &
liabilities of the busted bank - without cost to the guaranty fund.
On Jan. 31, 1924 the Board granted charter to the Guaranty State
on condition that it take over all the assets & liabilities of
Emory
Bank of
Bank of Emory - without cost to the guaranty fund.
State
the First
the application for a bank at Booker was again rejected by
1924
6,
On Feb.
the Board.
(charter)
On Feb. 28, 1924 the Guaranty State Bank at Detroit, Texas
take over
bank
was approved by the board in connection with a deal that the new
by
closed
been
had
all assets & liabilities of the Detroit State Bank which
the Commissioner on Jan. 31, 1924.
•
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Federal Reserve Bank of St. Louis
-15In reading through the minutes of the State Banking Board during
this period it becomes apparent that the guaranty fund was fighting a losing
battle for existence & solvency. The deals, negotiations, etc. of the
Commissioner - all designed - not to bring about better banking conditions but to reduce the losses to the guaranty fund as much as possible - lead to the
conjecture that the fund might have failed a few years before 1925 if it 110
not been for such activities. That is to say, the assessments provided in the
guaranty law were insufficient to meet the claims of depositors. The fund
was busted just as much as its member banks. All the attempts of the
Commissioner and the State Banking Board resulted in shifting losses to fellows
desirous of having a "go" at the banking business. Many of the new banks,
organized to take over busted banks, lasted only a few years & then failed
like their predecessors.
The State Banking Board & the Commissioners failed completely to
suggest that they were even aware of any fundamental defects either in the
guaranty fund system or the State banking system. No remedial suggestions
were forthcoming - merely blind attempts to follow the law - that became
increasingly 'unworkable. It was not the duty of the Commissioner or the State
Banking Board to save the Guaranty Fund "a considerable sum" when guaranty
banks failed - especially when such savings meant merely shifting the losses
to someone else.
The Commissioner very frequently negotiated for the purchase of
assets & liabilities of banks with incorporators - before he closed the busted
banks
During the early part of 1924 the minutes are literally full of such
chartering of new banks to take over busted guaranty banks. It apparently
never occurred to anyone to inquire as to why the banks failed in the 1st
place - or what better situation would result by organizing a new bank & filling
it with bad assets of a busted bank - but in each case the Commissioner could
proudly point out that such a deal would save the guaranty fund "... a considerable fund."
Mr. Chapman, the Commissioner - was also able to reduce losses to
and
the guaranty fund by permitting stockholders to pay their double liability
Farmers
the
of
case
the
in
1924
7,
June
reopen busted banks. This was done
ner on
& Merchants State Bank of Winnie which had been closed by the Commissio
May 28, 1924.
banks
On June 10, 1924 the Board approved a resolution to require 35
the
of
excess
in
were
deposits
their
because
to increase their capital stock
maximum allowed by law - in relation to their capital.
Banks were failing every week through 1923 & 1924.
was
On Aug. 11, 1924 the Board approved a deal whereby a new bank
bank
new
the
&
$25,000
capital
Bank)
State
(Guaranty
to be chartered in :Ato
Bank.
was to take over the assets & liabilities of the insolvent Alto State
s.
depositor
pay
to
7
$78,853.5
Bank
State
Alto
the
The Guaranty Fund paid
guaranty
the
to
losses
the
reduced
procedure
this
that
Comm. Chapman argued
During the latter part of 1924 and the
Fund (See p. 53 of these notes).
plan more
early part of 1925 - new banks began to adppt the bond security
frequently than before these years.
ly all
After the amendment in 1925 to the guaranty law - practical
their
seeking
were
banks began to join the bond security system when they
charters.
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Federal Reserve Bank of St. Louis
-16-
•
•
0
The Peoples State Bank of Pearsall was closed by the Commissioner
on Nov. 10, 1924. Prior to the failure of the bank, the cashier removed all
the books & records of the bank to a pasture a few miles distant from Pearsall
& burned them. In May (9), 1925 the Banking Commissioner was still trying
to reconstruct a set of books from statements of accounts delivered by the bank
to its customers.
In the 1st week of June 1925, 7 banks failed & the Fund had to pay
out substantial sums in each case. In 1925 there were a large number of guaranty
banks that failed & each failure cost the fund heavily.
At meeting of Dec. 23, 1926 Comm. Austin notified the board that a
large number of guaranty plan banks had adopted the bond plan, others had converted to or consolidated with national banks - and all the withdrawing banks
were entitled to a return by the guaranty fund - of their unused contributions
to the fund. These claims were so heavy that special action was neceesary.
In addition to a large number of busted banks, there were other claims. One
claim arose out of ai.j.t by S. W. Sibley et al. (& the District Court of
Johnson Co. said the fund had to pay out) i125,000 - which had been paid in
order to start the Guaranty State Bank of Cleburne which banks purchased
certain assets of the Traders State Bank of Cleburne which failed April 15,
1922 - the suit bein+redicated upon an allegation that the value of the assets
purchased were fraudulently represented by Ed. Hallthe then Commissioner.
This judgment was being appealed to the higher courts. There were
other claims also.
(See p. 50 of these notes - On Jan. 21, 1927 a charter was issued to the Alto
State Bank, cap. $25,000 (Alto, Cherokee County) for the purpose of taking
over the assets and liabilities of the busted Guaranty State Bank of Alto.
The Guaranty fund did not have to pay out any additional funds on this deal).
Only other business at this meeting was a similar deal. At meeting of Jan 24,
1927 two similar deals to reopen busted banks were approved by the Board. On
Jan. 31, 1927 another busted bank was permitted to reopen.
Meeting of Feb. 7, 1927.
"The Citizens State Bank" of Calvert was granted a charter - (Robertson Co)
$50,000 capital - for the purpose of taking over all assets & liabilities of the
busted Union State Bank of Calvert which closed Jan. 20, 1927. Stockholders
of the new bank were principally stockholders of the old bank & they agreed
to accept all liabilities of the old bank if a new charter were granted. (NO
losses to guaranty fund were involved) There was another state bank operating
in Calvert at the time & it continued to operate On same day the Commissioner notified the Board that the American
Trust & Savings Bank, ElPaso - operating under the bond plan - with cap. stock
of $300,000 & deposits of approximately $2,250,000 - closed on Jan. 27, 1927
as result of run by depositors caused by the Comm. notifying the District Attorney
that one of the officers had embezzled a large sum of money. Stockholders had
propositioned the Comm. that they would reimburse the bank for the embezzled
funds, & that depositors in the busted bank holding not less than 75% of total
deposits were being asked to accept deferred credit for from 75-90 % of their
respective deposits in such manner as to spread the danger of withdrawal over
an 18 month period - thus to permit the bank to reopen without being called
on to pay all its depositors immediately. The Banking Board approved the
reopening on this basis.
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Federal Reserve Bank of St. Louis
1
-17It is, of course, not possible to know exactly how successful the
policy of the Commissioner was in assets negotiating with people to buy and
assume liabilities of busted banks - in his attempts to reduce losses to the
guaranty fund. Nevertheless, a number of banks organized primarily or chiefly
to take over the assets of busted banks - soon found themselves insolvent.
For example on March 7, 1922 the El Paso Bank & Trust Co. failed.
The Commissioner agreed & paid the City National Bank of El Paso $129,614.05
to take over all the assets & liabilities of the busted bank & thus relieve the
guaranty fund of any further liability. In 1924 the City National Bank itself
failed - and at meeting of the Banking Board on Feb. 12, 1927 they were involved
in controversy over guaranty fund liabilities & claims.
•
Feb. 21, 1927 charter for Fulbright State Bank, Fulbright, Red River
County approved - cap. $17,500 to take over assets of the busted Guarantee
State Bank, Fulbtight (cap. $30,000) which had failed Dec. 29, 1926. Fulbright
was a small rural town dependent entirely on farming interests for its
support & all or substantially all - of the loans of the busted bank consist
of notes of farmers - & if Comm. proceeded with the liquidation it would be
necessary to file many suits against these farmers to collect on their notes,
also he would have to take possession of the livestock of many of these farmers
which had been mortgaged to the bank as security for their debts & would thus
neceesarily deprive many of these farmers of ability to make a crop during
the coming year. The new bank proposed to carry the farmers' debts until they
had made another crop & were in better position to liquidate them in whole or
part - & incorporators proposed to buy from the Commissioner all assets &
assume all liabilities'of the busted bank. Comm. recommended chartering the
new bank & it selling the assets of the busted bank. The Board gave its
unanimous approval.
This bank managed to remain open until Nov.1941 when it went into
voluntary liquidation & placed its affairs in the hands of the Banking
Commissioner.
•
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
•
Notes and excerpts from "The History of the Insurance of Bank Deposits in Texas
by State Agencies" thesis at University of Texas for M.B.A. degree by Oscar
Curtis Lindemann, August 1948.
Chapters III 4-43rThe Texas Guaranty Fund Plan, 1909-1920
1/A4- /9a-7
"The initial assessments for the Guaranty Fund of one per cent of the
average daily demand deposits started immediately after January 1, 1910. The
Commissioner of Insurance and Banking reported in his annual report that 541
banks were members of the Guaranty Fund Plan on August 31, 1910. The fund
that had accumulated from the assessments amounted to $431,834.18 1/ ....
On June 30, 1910, no bank in the system had non-interest-bearing and unsecured
deposits of more than $1,000,000.00 2/" (pp. 26-27)
A year later the fund had increased to $495,685.67.
•
(p. 27)
"The banks which paid these special assessments were to be repaid a pro
rata part of any liquidation dividends collected when the failed bank's assets
were sold. To facilitate the collection and the repayment of a pro rata part
of these assessments, the State Banking Board decided that the special
assessments would be kept in a different fund from the regular yearly assessments paid by the banks. This plan was followed during the entire life of the
Guaranty Fund." (p. 29)
1/ Report of the Commissioner of Insurance and Banking of the State of
Texas, 1910, p. 5.
2/ Ibid., p. 5.
•
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Federal Reserve Bank of St. Louis
-2-
Thesis - 0.C. Lindemann, August 1948 (cont.)
Table
Table 2 (p. 30)
Banks Participating in the Guaranty Fund - 1910-1920
Guaranty
Total Number Guaranty
Failures
Fund
of State
Year
Banks
Banks
1909-1910
1910-1911
1911-1912
1912-1913
1913-1914
1914-1915
1915-1916
1916-1917
1917-1918
1918-1919
1919-1920
584
678
728
776
849
831
836
874
874
970
992
541
633
675
718
787
780
788
828
831
928
1
2
1
Bank Membership and Failures in the Texas Guaranty Fund
1921-1927
Year
1920-1921
1921-1922
1922-1923
1923-1924
1924-1925
1925-1926
1926-1927
Total Number
of Banks
1025
986
950
950
900
875
765
Guaranty Fund
Banks
984
953
919
920
416
75
26
Guaranty Fund
Failures
22
27
15
10
27
10
5
1
950
Note: The figures presented in this table are those
of August 31, of the respective years. They were
taken from the reports of the Commissioner of
Insurance and Banking of Texas. Where these reports
were not available, the figures were taken from
various sources such as the Dallas Morning News
44 the Texas Banker's Record.
Sources: Annual Reports of the Commissioner of
Insurance and Banking of the State of Texas 1910-20;
and Records of the Guaranty Fund in the State
Banking Department.
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Federal Reserve Bank of St. Louis
5 (p. 42)
Sources: Reports of the Commissioner of Insurance and
Banking of the State of Texas, 1921-22, and Records
of the Guaranty Fund in the State Banking Department
of Texas.
0
Thesis - 0. C. Lindemann, August 1948 (cont.)
-3--
•
Number and Deposits of State Banks
1/
1909-tvsef 1920
1909
1910
502
621
1911
1912
1913
1914
688
728
776
849
1915
1916
1917
1918
1919
1920
831
836
874
874
970
Source:
Year
1920
1921
1922
1923
1924
1925
1926
1927
3/
Deposits
2/
Number of Banks
Year
$43,329,000
54,605,000
59,333,000
640556,000
86,485,000
76,101,000
104,975,000
160,417,000
215,906,000
203,642,000
336,018,000
297,100,000
992
Robb, T. B. The Guarant
.
of Bank Deposits,, p. 156.
4
1920-1927
Number of Banks
964
1022
970
950
933
834
782
748
5/
Deposits 5/
4 330,306,000
235,328,000
257,929,000
299,041,000
315,851,000
216,306,000
210,687,000
247,537,000
I/ Data extracted from Table 4, p. 37, of Lindemann Thesis.
OloastAxmxtmcztadxfmaxItiamx94ximxnxzbcktwelimminumlkitti
Ey
Report of the Bank Commissioner, 1918, pp. 29-85.
Senate Document, No. 478, and Reports of the Bank Commissioner.
Data extracted from Table 8, p. 52, of Lindemann Thesis.
2/ Biennial and Annual Reports of the Commissioner of Insurance and Bankin 1920-1922; Call Statements, State Department of Banking, 1923-1927.
e
•
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Federal Reserve Bank of St. Louis
A
Thesis - 0. C. Lindemann, August 1948 (cont.)
_14-
•
ASSESSMENTS LEVIED AND LIRVIDATION DIVIDENDS REPAID BY THE
GUARANTY FUND
1910-1927
Assessments Levied
(.00 omitted)
Year
1/
1910-1911
1911-1912
1912-1913
1913-1914
1914-1915
1915-1916
1916-1917
1917-1918
1918-1919
1919-1920
•
g/
1920-1921
1921-1922
1922-1923
1923-1924
1924-1925
1925-1926
1926-1927
$ 111,6149
Dividends Repaid
(.00 omitted)
/
j
333&I(.
146
1
21,69761,233-67,709 3“
303,050
61,539
28,434
17,495
13,204
3,436
31,990
30,768
u.
----
44
'
4-06-2-',4;sk
\
fV
41
1
r, I
tt ,
,
/vit a
4
s 995,36T." '
2
2,589,720
2,104,183
7 )2,5
3,634,180
1,362,983
C7'7-
733,821
Ct
2,854
854,642
643,444
1/ Data for period 1910-1920 extracted from Table 3, p. 33, of Thesis.
Table 6, p. 47, of Thesis.
"
2/ Data for period 1920-1927
Sources: Annual Report of the Commissioner of Insurance and Banking for the
State of Texas, 1910-20; 1921-22; and Records of the Guaranty Fund in the
Slate Banking Department of Texas.
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1
5,6
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•
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
•
Thesis - O. C. Lindemann, August 1948
-5-
•
"The fiscal year 1922-23 brought more bank failures and more assessments
upon the members of the Guaranty Fund. The.total assessments collected in 1923 mem
amounted to $2,104,183.00 for 15 Guaranty Fund failures. W" (pp. )40-41)
"The first part of the fiscal year 1923-24 saw a decrease in the number
of bank failures, which amounted tc 10 for the entire year. .... The latter
part of 1924 brought with i a new wave of failures. The assessments
ame so heavy that the bankers began criticizing
against the member banks be 4
the assessment program cf the fund.".xxxxxR (pp. 41, 43)
Notes on pp.
43-53.
(Pf.rm which Lindemann's material is largely drawn from the Texas Bankers
Record.)
Quota;41.C. Page re Department's estimate of recoveries in TBR Oct. 1924,;p. 11
(P. 43)
Quotes B. C. Roberts TBR Nov.
1924, p. 13 (pp.43-44)
Quotes Z. D. Bonner TBR Nov. 1924, p.
Quotes TBR Jan. 1925, p. 28
•
11 (44-45)
(45-46)
State's banking commissioner reported 100 guaranty fund banks converted
to national banks during 1925 and 1926. Texas Banker's Record, September 1926,
p. 33 (p. 46).
In January of 1925 the Banking Department reported that from
September 1, 1920 to January 24, 1925)eighty-three banks under the Texas
Guaranty Fund had failed, which,/caused gross assessments to be collected of
$12,871,428e09. The banks wer repaid $2,717,344.00 in liquidation dividends,
and about $467,845.00 remained to be distributed. The net losses to the
members were about $9,185,689.00. 11/" (pp. 46-48)
"From Tables 5 and 6 it can be seen that 1925 was not proving to be a
good year for the banks. Before the fiscal year ended on August 31,
s
twenty-seven banks failed, which necessitated assessments and collection
the
kept
s
of $3,634,180.00. The continuation of failures and assessment
the
problem before the bankers who were able to bring enough pressure on
No. 114
Bill
legislature to get the law amended; and on February 7, 1925, Senate
" (p. 48)
was passed.
•
g Records of the Guaranty Fund, in the State Banking Department.
114 The Dallas Morning News, January 24, 1925, p. 16.
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Federal Reserve Bank of St. Louis
Thesis - 0. C. Lindemann, August 1948
-6"The Department of Banking reported that 300 state banks had changed
to the Bond Security System between February 7 and May 15, 1925. 12/" (p. 48)
"The Guaranty Fund System had caused great losses to the bankers of
Texas while it was in operation. From its beginning on January 1, 1910 tcj 2x4
June 10, 1926, the Guaranty Fund collected special assessments for the
payment of depositors of failed Guaranty Fund Banks amounting to
$17,322,902.00. 15/ Not all the assessments are included in this amount,
because the fund continued to operate until February, 1927. The yearly premiums
are also excluded from this total. The original records of the Guaranty
Fund have been destroyed; so the exact amount that was collected is not
available. However, in a study of the Texas Guaranty Fund made in 1933 by
the Economic Policy Commission of the American Bankers Association, the
f
total cost of the Guaranty Fund to Texas bankers in both special/and general
assessments is given as $19,000,000.00. 16/
The total liquidftion dividends
that were repaid amounted to approximately $4,340,000.00. (Tables 3 and 6)
The net cost to the member banks was approximately $15,000,000.00. This
cost, when expressed as a percentage of the average deposits of the member
banks ($140,000,000.00), is eight-tenths of one per cent per year. It is
three per cent per year of the average capital ($37,000,000.00) of the
member banks. 11/" (pp. 51, 53)
•
" .... The assessments reached one and three-fourths per cent in 1922,
one per cent in 1923, and the maximum two per cent of average daily deposits
" (p. 53)
in 1925-26. 18/1"...
12/ Texas Banker's Record, May 1925, p. 32.
Lid, ,
Austin, Charles 0., Texas Banker's Record, June 1926, p. 37. ....."
15
16/ Economic Policy Commission of the American Bankers Association, The Guaranty
of Bank Deposits, p. 37.
11/ Love, T. B., East Texas Its History and Its Makers, p. 1382.
18/ Chapman, L. J., Texas Bankers Record, June 1924, p. 32; and Texas
Bankers Record, September 1926, p. 33.
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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
i y.tor74‘
t
"brse: kr
'41
, .•,.,(„040 t
A. A .2, i
7tr,
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2nusil.; - 0. C. Lindemann, August
1948.
-7-
•
Table
7 (10. 50)
Membership of the Guaranty Fund and the Bond
Security System
1923-1927
Date
Guaranty Fund Banks
December 31, 1923
December 31, 1924
May 15, 1925
December 31, 1925
June 1, 1926
August 1, 1926
December 1, 1926
February 2, 1927
Source:
•
047
•
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Bond Security Banks
31
30
330
484
654
679
Roo
739
919
920
620
358
160
127
75
27
Texas Bankers Record, various issues, 1923-27.
/1.
SIX YEARS OF THE GUARANTY FUND, ITS OPERATION AND
EFFECT.
By Hon. JOHN S. Permisos, Commissioner of Insurance and Banking of the
State of Texas.
To the Guaranty Fund Banks of Texas:
Since the depositors' guaranty fund. was created for. and is the
property of, the State banks for the benefit of their depositors, they
are entitled to know whether it has been a success ,or failure, and I
deem it appropriate at this time to report briefly the present status
of this fund and its operation since the law became effective on January 1, 1910.
It now has been in operation in Texas for six years. It will be recalled that the passage of this law by the legislature met with serious
opposition. mainly by the national banks, through fear of losing their
deposits. While the effect of the law has tended to increase the deposits of the State banks, the increase has come, not from the national banks, but from buried funds of timid depositors, and largely
from our foreign citizenship, who, not understanding our institutions, lack confidence in them. Comparative figures of the date when
the law was enacted with those of the present will justify the state,ment that national banks have received directly a fair proportion of
the money brought into circulation by this law, and indirectly hold
large amounts of such deposits as reserve agents for State banks.
In all State banks which have accepted its provisions the noninterest-bearing and unsecured deposits are protected by and paid from
this fund in the event of a failure of the bank. These banks are
known as "guaranty-fund banks." All State'banks not adopting
the guaranty-fund plan are required to execute a bond, or other security, equal to the amount of their capital stock, and such banks are
known as "guaranty-bond banks." Out of the 836 State banks now
in existence. 780 have adopted the guaranty-fund plan. while 56
have adopted the guaranty-bond plan. Twelve of the 56 are trust
companies and do not transact a commercial banking business. Only
two banks organized within the last three years have adopted the
guaranty-bond plan. Within the last month three banks which
adopted the guaranty-bond plan at date of organization have applied to this department for a surrender of that right and the adoption of the guaranty-fund plan. It is therefore quite evident that
the guaranty-fund plan is more acceptable to the State banks of
Texas than the guaranty-bond plan.
The guaranty fund is created byan annual assessment on the guaranty banks of one-fourth of 1 per cent of their daily average deposits.
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Federal Reserve Bank of St. Louis
8
4
SIX YEARS OF THE GUARANTY FUND.
Twenty-five per cent of each assessment is deposited with the State
treasurer at Austin and the remaining 75 per cent is deposited with
each bank to the credit of the State banking board, subject to call at
any time for the payment of depositors of a failed bank. The law
provides that when the guaranty fund reaches $2,000,000 the assessments will be discontinued, except when necessary to supplement
withdrawals for the purpose of paying losses. The sum total of the
amount collected from the banks for the guaranty fund since January
1, 1910, when the law became effective, is $1.339.231.18. Out of this
amount there has been paid to depositors in State banks the sum of
$212,000. leaving in the guaranty fund at present the sum of $1.127,231.18. This amount is immediately available for the payment of
all noninterest-bearing and unsecured deposits in any failed bank
which has adopted the guaranty-fund plan. While there has been
'paid from the guaranty fund to depositors in failed banks since the
law became effective the sum of $212,000, there has been collected
from the assets of the failed banks and returned to the guaranty fund
the sum of $125,800, leaving the net payments from the guaranty
fund $86,200. From actual cash and assets yet on hand belonging to
the failed banks it is believed that sufficient collections will be made
to reduce the net amount paid from the guaranty fund to approximately $54,000, which means that it has cost the guaranty banks of
this State approximately $9,000 a year for the past six years to insure all of their noninterest-bearing and unsecured depositors against
loss on account of bank failures. The capital stock of the guaranty
banks is approximately $26.000,000, hence it will be seen that each
share of stock of the par value of $100 has paid only 34 cents pet
annum, or 21 cents in six years, for this insurance. This sum is
infinitesimal, yet it has been sufficient to protect every noninterestbearing and unsecured depositor in guaranty banks of this State
against the loss of a penny. This is the cheapest insurance ever
known in the history of this country.
For the protection of the noninterest-bearing and unsecured depositors the law wisely provides that the assessment may be increased
from one-fourth of 1 per cent to 2 per cent per annum to meet excessive losses. With $100.000 average daily deposits. the maximum
assessment would bring to the guaranty fund annually $2.000.000.
With the stringent laws that now safeguard the deposits in State
banks, with their rigid enforcement., as has obtained in the past six
years, with a thorough examination every three months by competent examiners, with the stockholders' double liability and with the
officers' and directors' common-law liability for the mismanagement
of a State bank, and with bonded officers, it is confidently believed
that the assessment will never exceed the minimum of one-fourth of
1 per cent in Texas. The department has exercised every power at
its command to put out and keep out of State banks men who have
proven themselves unworthy. A carefully prepared list of all hankers guilty of misapplication of funds, together with a list of incompentent bankers, is kept in the office for ready reference. The department spares neither time nor money in prosecuting those who
violate the law, with the result that several are now serving time in
the State's prison. However, in some instances communities have
created a sentiment in favor of those criminals which has found its
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Federal Reserve Bank of St. Louis
SIX YEARS OF THE GUARANTY FUND.
5
way to the jury box. No leniency should be shown to one who has
feloniously embezzled trust funds, and it is the intention of this
department to enforce the State banking laws for the protection not
only of depositors but of the stockholders as well. Ninety-nine per
cent of all bank failures, both State and national. can be traced,
directly or indirectly, to the violation of the banking laws.
Since the guaranty law became effective. on January 1, 1910. to
December 1, 1915, when the figures herein were compiled, a period of
5years and 11 months. the guaranty fund has been drawn upon seven
times for the purpose of paying off the noninterest-bearing and unsecured depositors in failed banks. Unless some good reason exists,
the depositors entitled thereto are paid as quickly as their accounts
with the failed bank can be balanced and the depositor can make the
required affidavit. This is becoming quite well known to the depositors in guaranty-fund banks, and when one is closed it creates no
more of a panic than the closing of a grocery store. Frequently the
depositors show absolute indifference in calling for their money after
they have been notified that the bank has been closed. I am of the
opinion that the greatest benefit derived from the guaranty law is the
alleviation of the panicky conditions which heretofore followed the
closing of a bank. Not only have neighboring State banks but
neighboring national banks as well felt the good effect of the law in
this particular.
The closing of the Harris County Bank & Trust Co. on September 7. 1911, caused the first demand on the guaranty fund. This
bank was closed on Wednesday, and on the following Monday the
guaranty fund had on deposit in Houston a sufficient sum with
which to pay all noninterest-bearing and unsecured deposits, and
the same were paid as quickly as presented. The guaranty fund
paid to the depositors in this bank $111,615.62, and from the assets
_ )of the bank have collected and returned to the guaranty fund
— $72,572.44. leaving a net loss to the guaranty fund of $39,043.18.
The bank still has assets on hand, but it is likely that the amount
realized therefrom in the future will be small.
The First State Bank of Kopperl was closed on December 6,
1911, and the noninterest-bearing and unsecured depositors were
promptly paid out of the guaranty fund, the amount used for this
purpose being $8,000, and of this amount $4.000 has been collected
from the assets of the failed bank and returned to the guaranty
fund, which is probably all that will be realized from the assets of
the insititution.
The Paige State Bank was the third to call upon the guaranty
fund. It was closed February 10, 1912, and the deposits subject
to the guaranty fund were paid within 10 days from the date the
bank closed. $13,697.20 being the amount used for that purpose.
Ten per cent of this amount has been returned to the guaranty fund,
and it is not likely that any more will be realized from the assets
now on hand.
The First State Bank of Amarillo was closed on April 2, 1914,
and the guaranty fund was called upon to pay the depositors of that
bank $87,476.62, and of this amount $66,607.46 has been collected
from its assets and returned to the guaranty fund, and it is believed
that from the assets yet in the hands of the commissioner a sufficient
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Federal Reserve Bank of St. Louis
-
SIX YEARS OF THE GUARANTY FUND.
6
0
awn. On
sum will be realized to fully restore the amount withdrthe
of
stockcertain
by
ed
institut
suit
ion
injunct
an
of
account
holders of this bank the commissioner was prevented from paying
of the
the depositors until August 3, 1914. This delay was noefault
court
suprem
held
the
that
department. It might be here stated
ioner
could
commiss
the
that
failure
this
of
out
g
growin
case
a
in
levy the 100 per cent assessment provided by law against the stockholders of a failed bank as soon as the same was closed, without
waiting to determine the amount of the bank's shortage.
The Garza State Bank, closed on September 11. 1914, was the
fifth bank for which a draft was made upon the guaranty fund to
pay depositors. The amount was $10,046.43, of which amount
$6,566.80 has been returned to the guaranty fund. The depositors in
this bank were paid within three days after the closing of the institution. The assets of this bank were sold in bulk and its affairs
closed, so that no further contribution to the guaranty fund can be
expected from its assets.
The Stonewall State Bank was closed on October 5, 1914, and the
deposits subject to the guaranty fund, amounting to $4,006.47, were
immediately paid. There has since been collected from the assets
this
of this bank and returned to the guaranty fund 50 per cent of
full
the
d
that
believe
is
it
hand
on
now
assets
the
with
and
.
amount
amount will finally be returned.
The Guaranty State Bank of Longbranch closed its doors on
October 22, 1914, and draft was made on the guaranty fund for
$3,650.85 for the purpose of paying the deposits subject thereto.
One-half of this amount has been collected from the assets and returned to the guaranty fund, and it is believed that from the assets
now on hand the guaranty fund will be fully reimbursed.
The guaranty fund does not receive all the money collected from
the assets of a failed bank, but only pro rata with other creditors of
the institution. Deposits which are otherwise secured or upon
which interest is paid are not protected by the guaranty fund, but
are safeguarded by every other provision of the law applicable to
the guaranty fund.
The department is of the opinion that the guaranty bank law in
this State has not only been a blessing to the depositor who had his
money in one of the failed banks named above, but that it has given
confidence and stability to the State banks of Texas, not only at
home but abroad; that it has enabled the State banks to increase
not only their volume of business but their earnings, and that, too,
far in excess of the cost incurred; that it has brought from hiding
many thousands of dollars and placed it in the channels of commerce for the benefit of mankind.
A comparative statement of the call on November 16. 1910. just
before the law, became effectivel with the last call statement of November 10, 1915, will furnish interesting figures of the growth of
the .State banks in Texas under the guaranty-bank law and will
justify the above assertions. These statements disclose the following
figures:
State banks and trust companies, 1910_
State banks and trust companies, 1915___---______
Combined capital, 1910
Combined capital, 1915
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Federal Reserve Bank of St. Louis
502
sia. 000.000
82,000,000
•
SIX YEARS OF THE GUARANTY FUND.
Surplus and profits, 1910
Surplus and profits, 1915
Deposits, 1910
Deposits, 1915
7
— $3,
"
.000
,
10,r0
42,000.000
101,000,000
Each call statement since this law became effective, with but one
exception, has shown an increase both in number of banks and
amount of capital stock. From November, 1914. to June, 1915, there
were only four State banks organized2 but from June, 1915, to the
present time there have been 17 organized and opened for business,
all adopting the guaranty-fund plan. There are now on file in
the department applications for charters for six banks which have
not been acted upon. A rigid investigation is made before a charter
is granted, for the purpose of ascertaining whether or not a bank
is needed at that particular point, and for the further purpose of
determining whether or not the proposed organizers are suitable
persons to be placed in control of a banking institution.
The call statement of November 10, 1915, disclosed more money
on deposit in the State banks than ever before in the history of this
State. In many portions of Texas, and especially in the western part
of the State, the !plinks have an unusually large deposit. This condition of affairs has a tendency to cause some of the less conservative
banks to become overextended. Crop conditions in the western portion of Texas are not as certain as in other portions of the State,
and banks should husband their resources for less prosperous years.
There should be a general move throughout the entire State to
create an incentive among the people to save their earnings and
build up a bank balance, and especially should this be done by savings banks in Texas. It seems that the wage earner in Texas is making very little effort to save his money. The Farmington Savings
Bank, of Farmington, Conn., a town of less than 1,000 population,
has more than $5,000,000 of savings deposits, while the combined
deposits in the savings bailks in the State of Texas, an empire within
itself, amount to only $4,000,000.
The guaranty-fund law has been in operation in both Kansas and
Nebraska for about the same length of time that it has been in
operation in Texas, and the reports show that it has been very successful and has cost the banks very little, and unquestionably has
increased the bank deposits of both States and made its banks institutions for large and popular State service. Oklahoma is the only
State in which the law has been tried and found expensive to the
banks, and the defects in the law as originally passed have been cured
to such an extent that it may be said that it is now being successfully
operated in that State.
The criterion by which every law must be tested is the quality and
quantity of service which it renders the public, and, judged by this
criterion, I am of the opinion that the depositors' guaranty-fund
law of this State merits the highest consideration and the complete
confidence of the people. The State banks of this State afford every
protection to the depositor given by those chartered by the National
Government, including the opportunities to avail themselves of the
privileges given by the Federal reserve act, and, in addition, have the
depositors' guaranty fund behind them, the merits of which is no
longer a subject for debate. The laws of this State have made such
generous opportunities for its banks to serve the public, it appears
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Federal Reserve Bank of St. Louis
8
SIX YEARS OF THE GUARANTY FUND.
to me that every State bank and State banker should also ask that
its or his actions as a bank or banker shall be tested by the criterion
suggested above—that is, the plain test of service rendered to the
public. I therefore urge all State bankers and State banks during
the succeeding year to make a consistent and continued effort to make
our State banks popular in the public mind by a careful, continuous,
and consistent effort to render the State banks of this State institutions of public service. In the final analysis of things the banker,
like every other man, receives in return from the public only that
which he in turn has given to the public—that is to say, his compensation in its ultimate result is measured solely by the service he
has rendered.
This department, in entering upon another year's work, will labor
diligently to assist the State banks of this State to become more than
ever institutions of public service, and in this effort I desire to ask
the confidence and cooperation of the banking institutions under my
supervision.
Respectfully submitted.
JOHN S. PATTERSON,
Comminioner.
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Federal Reserve Bank of St. Louis
GUARANTY OF BANK DEPOSITS
TEXAS
From FederEd Reserve Bulletin, September 1925
bowl-security- system. On this date noningisst bearing, unsecured deposits ,protected
In February Texas modified its guaranty law by,the fund, totaled $115,000,000. The amount
by enacting legislation under which banks are of'deposits in banks which have failed during
permitted to shift over from the State's guar- the guaranty period is given as follows:
anty fund system to its alternative bond-secu1, 1910, to Sept. 1, 1920
$881,500
rity system. The act declared an emergency to Fronilliept.
Year ended Sept. 1exist in that many banks desired to make this
1921
3,998,441
change. Upon initiation of the Texas system
194
4, 277,587
1923
1,917, 708
in 1910 banks were permitted to elect between
1924
1, 743, 420
these systems, and the option has been pre- From Sept. 1, 1921, to Apr. 29, 1925
4,029,351
sented to banks which have organized from
year to year during the guaranty period.
Theoretically, it is stated in reply to recent
Very few banks had, in fact, elected to deposit inquiry, the banks have been assessed and
security bonds, the number of such banks as depositors have been paid in thesePimounts.
given in the State report for 1922 being only In the 10 years ended September 1, 1920, a
33 in a total of some 900 State inslitutions. total of $571,000 was realized upon the assets
Since February, however, a very coaiderable of failed banks, and in the period from Sepnumber of hanks have shifted over to the bond- tember 1, 1920, to December 15, 1924, a total
security . system. Temporarily something in of $2,717,845. Cash on hand in the fund on
the nature of a "rush away from the guaranty May 1, 1925, amounted to $968,556, and there
fund" is reported to have developed,op the was $3,085,889 on deposit in banks subject to
course of which many banks withdrewl from check of the St ate banking board. Under the
the fund and deposited bonds. It may be Texas statute assessments are limited to a
noted that, while 33. State banks had teen maximum of 2 per cent of deposits in any one
national charters in three years ended 0
ear and no authority has been granted for
31, 1904, a large proportion of the Ste levying emergency assessments. Banks are
institutions-330, or approximately one-third requirI to contribute one-fourth of 1 per cent
in 1922-are operating with a capital of less to the "regular or capital fund" until it
than $25,1100 and are therefore not eligible for a ounts to $5,000,000. On May 1 assets of
nationalization. Changes in the number of
banks in the hands of the commissioner
State banks and in the volume of their deposits
ed $23,196,892. The liability of the fund
during the guaranty period are indicated in the t
positors on account of failed banks totaled
following table, which gives corresponding data S ,052, covering losses in two recently failed
for national banks:
in tutions for whichiessessmentsx.4tad not
were no unpaid Ararrants
Number of =kV been levied. There
banks
or certificates outstanding and never had been
Year
any. Administrative practice in paying off
OPTIONAL PARTICIPATION
State
" '1.
stbDI 141tal
depositors, it is explained, has varied under
administrations, the records showing
different
140,240
174,033 that from 30 days to 9 months have elapsed in
524,544
211,480
to pay
163,694
395,372 individual cases before beginning
495, 388
156,793
589
832,309 depositors.
156,409
594,402
987I 578 176,393
It will be apparent that the Texas law has
imposed heavy burdens upon participating
By May 1, 1925, the number of banks par- banks. These burdens have been carried by
ticipating in the guaranty fund had fallen off the banks, but the recent breaking away from
to 617. Undoubtedly the decrease is ac- the fund system may be interpreted as one
counted for primarily by defection to the effect of the high costs of this sort of insurance.
1910
1914
1920
1921
1922
1923
1924
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Federal Reserve Bank of St. Louis
I
•
TEXAS
Institutions included.—Every corporation hereafter
incorporated under the laws of Texas with banking and
discounting privileges and banidme and trust corn-
•
posies heretofore incorporated under the Texas bankmg law or hereafter incorporated.
Partioipation.—Compulsory. Banks may elect
whether,they will secure their depositors by the 'guaranty-fund system or the bond-security system, but such
depositors must be secured by one or the other of such
systems.
Character of deposits guaranteed.—All deposits,
provided, however, no deposit upon which interest is
being paid or contracted to be paid; no deposit secured
in any way; no certificate of deposit, whether interest
bearing or not, that shall have been changed to a noninterest-bearing unsecured deposit within 90 days prior
to the closing of the bank by the commissioner; no deposit of public funds, whether interest bearing or not;
and no deposit made by a creditor for the purpose of
convexting a loan held against the debtor bank into a
noninterest-bearing unsecured deposit shall be protected or insured by the guaranty fund. Cashiers'
checks, bank drafts, or exchange issued against or
arising from bona fide unsecured non interest-bearing
deposits shall be protected under the guaranty fund.
Noninterest-bearing certificates of deposit *wed by
State banks and trust,companies are not proteilted or
insured by the guaranty fund.
Basis and rate of (a) regular and (b) special assessments.—(a) One-fourth per cent of daily average deposits not including United States, State, and other
public funds otherwise secured annually until fund
amounts to $5,000,000. (b) If the guaranty fund is
depleted so that it falls below $5,000,000 or below the
amount of the guaranty fund on January 1 preceding,
or in event of emergency at any time, the banking
board is authorized to require the payment for the current year of 2 per cent ,of the average daily deposits,
or such part thereof as is necessary to restore the fund
to the maximum above named or to its amount as of
January 1 preceding, or to meet the emergency. An
initial deposit of 1 per cent of the average daily deposits is required of banks entering the system at the
time of its inauguration, and banks formed since that
time and entering the guaranty fund are assessed 3 per
cant of their capital and surplus, subject to adjustment
on the basis of their deposits as provided for banks
already existing at the end of the year.
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Federal Reserve Bank of St. Louis
Method of payment of depositors.—Depositigiall
or
be paid in full out of the cash in the failed
trust company that can be made immediately available
and the remainder shall be paid out of the depositors' guaranty fund.
Powers .of State board or commissioners.—The
State banking board shall have control and management of the depositors' guaranty fund and shall have
power to adopt rules and regulations for the management of such fund and shall have contrcd,-and supervision of all State banking corporations sad trust companies. The bank commissioner is authnnized to wind
-trust company
up the affairs of any State bank
which shall become insolvent,and shall voluntarily or
by law come into his hands. The board is also authorized to levy special assessments, as set out above.
Disposition of guaranty fund.—Twenty-five per cent
of each guaranty fund payment shall be paid to the
State banking board in cash and shall by it be deposited.; with the State treasurer for safe-keeping.
The remaining 75 per cent of each such _payment shall
be paid by each bank crediting the State banking
board with such amount as a demand deposit subject
to check upon the order of the board. The board shall
keep at all times 25 per cent of the amount of the guaranty fund on deposit with the State treasurer.
or
Maximum assessment in any one year.—Two per
cent of average daily deposits; but this limitation n,
applicable to first payment to the guaranty fund r.•
quired of any bank which shall hereafter elect to secul ,
its deposits in the depositors' guaranty fund.
NOTE.—The laws of Texas provide also for the security of depositors by means of security bonds taken
out by the banks in favor of such depositors, and it is
optional with the Texas banks whether they will
secure their depositors by means of the guaranty-fund
system or by means of the bond-security system, but
they must secure their depositors by one or the other of
these systems. Only the law relating to the guaranty
fund system has been considered,in the above.
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Federal Reserve Bank of St. Louis
least 30 days before the next annual payment of that
fact; and thereafter the banks and trust companies
pagMeipating shall not pay any further amount into
said fund until said fund be depleted. In the event
of the depletion of said fund from any cause so that
it
fallseapw $5,000,000 or below the amount of the guaranty
d on January 1 preceding, or in the event of
nec
ty to meet an emergency at any time, said
banking board 8411 have authority to require the payment for the current year of 2 per cent of such daily
average deposits, or such part thereof as may be
necessary to restore said fund to the maximum above
named, or to its amount as of January 1 preceding, or
TEXAS
to meet the emergency; but no bank or trust company
coming under the proyisions of this chapter shall ever
(Digest of banking laws, 1923, ch. 7)
be required to pay more than 2 per cent of said average
Sec. 107. What banking, etc., corporations may pro- daily deposits for any one year: Provided further,
That first payment herein provided for by any bank
tect depositors under provisions of this chapter.
"Each and every corporation which may hereafter which shall hereafter elect to secure its deposits under
be incorporated under the laws of this State, with the depositors' guaranty fund shall be made by said
banking and discounting privileges, and each banking bank to said banking board without reference to said
and trust company in this State heretofore incorpo- maximum amount in said depositors' guaranty fund."
rated under the provisions of chapter 10 of the acts of
the first called session of the Twenty-ninth Legislature, Sec. 110. Savings department deposits not included in
estimate of payment into guaranty fund.
and known as the State banking law, or hereafter incorporated under the provisions of this title, shall, at
"In computing the aggregate amount of average
its option, protect its depositors in the manner here- annual deposits of any bank or banking and trust
inafter prescribed, either by availing itself of the company, for the purpose of determining the amount
depositors' guaranty fund herein provided for, or by required to be paid into the depositors' guaranty fund,
the depositors' bond security system hereinafter set as provided in this chapter, the deposits of its savings
forth."
department as provided in chapter 4 of this title shall
not be included."
Sec. 108. Such bank, etc., to have option of methods
of securing deposits, must adopt one.
Sec. 111. Voluntary liquidation or change to bond secured
"Each
and
every
system—
bank
and
Return
trust
of
assessme
company
nt.
,
mentioned
Article
in
5,
44
shall
.
have
the
right
and
"In
the
privilege
event
of
the
voluntar
y
liquidation of any
at its option to secure its depositors by the manner, bank or trust company operati
under the provisions
method,
and
under
the
terms,
provision
of
the
depositor
s,
and
regulas'
guaranty
d,
when it shall be
tions as set forfitin this title for tile depositors' guar-'itiade to appear to the State anking board
that all
anty fund or tali' bond security 'sjostem: Provided, depositors have been paid i full, said
board shall
That all sucTbanks and trust compianes shall secure return to such bank or trust company the
rata
their deposits by one of said plans on January 1, 1910: part paid by it into such fund when unused.proOr,
in
Provided furlt
r, That such option shall be exercised the event any bank or bank and trust company that
on or before
tober 1, 1909; and provided that such has been operating as a guaranty fund bank shall
option shall
exercised by the holders of the mt- have ceased to operate as a guaranty fund
and
jority of the stock; and the president or cashier of adopted the bond security system under thisbank
chapter,
such bank shall notify the banking commissioner by its bond having been approved by the county
judge
registered mail of such action."
and filed with the banking commissioner of Texas, as
provided by law, said board shall return to such bank
Sec. 109. Bank, etc., electing
guaranty
fund
method,
or trust company the pro rata part paid by it into such
to pay what and when for creation of fund.
fund when unused." (Sec. 111, as amended by act
"For the purpose of creating a depositors' guaranty
fund, any such bank or trust company which shall of January 27, 1925.)
elect to secure its deposits under the depositor
s' Sec. 112. Funds paid to whom and how No diverguaranty fund
provided
for
by
sion—Rot State fund—Duty of board.
this
chapter,
if
its
application is approved
by
said
board
as
prescribe
"The fund pruvided for in this chapter shall be paid
Article 451, shall pay to said banking board, on d in
Janu- to the State banking board as follows: Twenty-five per
ary 1, 1910 1 per cent
of
its
daily
average
deposits
for
cent
of each payment required of each such bank or
the preceding year eliding
Novembe
r
1,
1909,
not
banking
and trust company shall he paid to said board
including United States, State,
or
other
public
funds,
in
cash, and shall he by it deposited for safe keeping
if otherwise secured. Annually
,
after
the
first
payonly with the State treasurer, as bailee for the State
ment to said fund, each bank and trust company
sub- banking board, and shall be paid out by the State
ject to the provisions of the guaranty
fund
plan
of
this chapter shall pay to said board one-fourth of 1 treasurer on warrants drawn by the order of said
board; and said fund shall never be diverted from the
per cent of its daily average deposits
for
the
year
ending November 1 of the preceding year,as above defined, purpose specified in this chapter, nor shall it ever be
d State fun*. The remaining 75 per cent
which amount shall be added to said, guaranty fund: considere
Provided, That when the amount available in said guar- of each payment required shall be paid by each such
bank
anty fund shall reach the sum of $5,000,000 the bank- State or banking and trust company crediting the
ing commissioner shall notify all banks and trust com- depositbanking board with such amount as a demand
subject to check upon the order of said board.
panies subject to the provisions of this chapter, at It shall be
the duty of said board to keep at all times
•
S
SEPTSMBEI1, 1925
FEDERAL RESERVE BULLETIN
25 per cent of the amount of said fund deposited with
the State treasurer in cash as provided herein."
SeJ4. Certain bank
trust companies to pay
Cftdit fund.
to bank and tr
companies, organized less
th
e year prior to
takin :effect of this law,
ter organized on. ,appro, 1 of heir appli
Or
' provided for in Arti , 451,
tion
11 pay
anty fund 3 per cent bY the amount of
said
tock and surplus which amount shall concarat
stitute tt credit fund, subject to 'adjustment on the
basis of:their deposits as provided for other banks now
existing at the end of one year: Provided, however, That
said payment shall not be required of banks and trust
companies formed by the reorganization or consolidation of banks that have previously complied with the
terms of this chapter."
Sec. 114. Board to admit, etc., only such banks, etc.,
as they deem solvent, etc. Applications—Grounds
of refusal to be stated.
"The State banking board shall admit to the benefits and protection of this chapter only such banks and
trust companies as, in their opinion, are solvent and
properly officered and conducted. * * *. Should
said board decline the applioation of any bauk and
trust company, it shall state the ground of such
declination to such
,a,nd whether the objection can be removed,
institution,
and thofiondition thereof."
Section 115. National banks ma avail of protection of
guaranty fund; may withdraw, when.
Any, national bank may avail its depositors of the
protection of the guaranty fund in the same manner as
provided for State banks, provided that if national
banks should be required by Federal law to pay assessments to any Federal guaranty fund such national
banks may withdraw fretn the'depositors' guaranty
fund of the State of Texas and have returned to them
the unused portion of all assessments paid by such
banks.
Sec. 116. Advertisements ofluaranty fund regulated.
"All banks or bank and teak companies provided for
by this chapter are lierebyeitithorized and empowered
to use any truthful method of advertising and in their
advertisement to make any truthful statements as to
the guaranty fund system or the bond secured system
of the State banks of Tessa, but if any State'bank. or
State bamk and trust company shall advertise any untement as to either of said systems the
truthlar
banki '
tissioner of Teikas is hereby empowered
to demand that said bank orjoank and trust company
immediately- discontinue:such untruthful advertising,
and the. banking commissioner shall be empowered to
enforce said' demand by removing any officer of such
bank or bank and trust company who is found to be
responsible for such untruthful advertising."
Sec. 141. Commissioner may wind up affairs of bank,
by receiver, etc—Bond---rust compa4i, shall
"Whenever any State ban
become insolvent and shall voluntarily, or by la*''!kirin
any manner as provided in this title, conic into the
hands of the banking commissioner of Texas, he may
proceed to wind up its affairs, either through a receiver
or through sonic competent person, who shall give
bond as may be required,the board payable to the
board, for the faithful performance of all duties imposed upon him. Said bond MeV be recovered upon
for the benefit of said giaranty fund or any party at
interest. On taking possession of the property and
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Federal Reserve Bank of St. Louis
653
business of any such State bank, the commissioner
shall forthwith give notice of such fact to any and all
banks, trust companies, associations and individuals
holding or in possession of any assets of any such State
bank."
Sec. 144. General powers and duties of commissioner.
"Upon taking possession of the property and business of such State bank, the commissioner is authorized
to collect moneys due to such corporation, and do such
other acts as are necessary to conserve its assets and
business and shall proceed to liquidate the affairs thereof as provided in this chapter."
Details of liquidation by commissioner.
Sections 142, 143, 145-150, 152, 158055-157, 159173 set out in detail the duties of the bank commissioner,in winding up the affairs of insolvent banks.
Sec. 151. Notice to claimants and creditors.
"The commissioner shall cause notice to be given,
by advertisement in such newspapers as • may direct,
weekly for three consecutive mont
which
* largertype
notice shall also contain ai,,stat
*
than that in which the bo?15r of s.
is printed
specifically stating that all such c'.1Mt of guaranteed
depositors of tile insolvent bank must be presented
and legal prootthereof made at e place designated
within 90 d
after the date of e first insertion of
such publis
notice, and that
la
guaranteed
depositors esented after expir on o
days from
such date' all be entitled to p nent o ny portion
thereof (en of the depositors' guaran
fund. The
comm. • ner shall mail a si
notic
all persons
whos
mes appear as cre
e books of
s upon
the Stale bank."
Sec. 154. Inventory of asse
of bank; and list of
0f coli
acth
ansi;ns
olvent filing;
requisite
baonpke,ntto inspection.
eoulnissfo
"Upon taking possession of the property and assets
State
ner shall
in
an inventory of the assets of such
in duplica , one to be filed in the office of the commissioner
and one in the office of the clerk of the county court
of the county in which such tate bank was located
and transacting business; up
the expiration of the
time fixed for the presentatio of claims the commissioner shall make a full and c plete list of the clainis
presented, including and specif
'eh
uns as have
been rejected by him, and sho
claims and
to
amounts paid
rs
of the deguaranteed clep
positors' guaranty fund, and the
which said
unt
fund is entitled by reason of i
b
'ion to the
rights of such guaranteed deposi
id, and all
amounts held by him on account
eta e of guaranteed depositors which have bee
ejected or are in
dispute, one to be filed in the offi of the clerk of the
aounty court of the county in w
i such State bank
was located and transacted business. ,Such inventory
and list of claims shall be open at all reasonable times
to inspection."
Sec. 158. Guaranty fund to receive its portion of dividends with interest—How paid.
"In the declaration aud payment of all such dividends, the depositors' guaranty fund shall be entitled
to receive as its dividend such portions of the amounts
due and payable to guaranteed depositors as shall have
been paid to them out IT -the depositors' guaranty
fund, together with 6 per cent provade#
interest hereon from
drawn upon
the date or dates upon which checks w
for the payall State banks, as hereinafter
ment of the guaranteed deposits of such State banks;
tobatik
s?
•
654
FEDERAL RESERVE BULLETIN
and the commissioner shall forthwith distribute such
dividends to State banks, upon which checks were
drawn for such payment of guaranteed deposits, in
proportion to the amounts of such checks, respectively."
SEPTEMBER, 1925
Sec. 176. State to have first lien on assets, for benefit
of guaranty fund.—Deposits not insured, etc.,
share in dividends of assets, etc.
"The State shall have, for the benefit of the depositors' guaranty fund, a first lien upon all assets of
such bank or trust company and all liabilities owing or
Sec. 174. Depositors paid in full out of guaranty accruing to such bank or trust company, in the event
fund, etc., excepting interest-bearing and secured of the closing, as provided by law, of any such State
deposits, paid pro rata from assets.
bank or trust company,,operating under the depositors'
"In the event the banking commissioner of Texas guaranty fund.plan; which lion shall attach and be in
shall take possession of any bank or trust company force from the time such bank or trust company is
subject to the depositors' guaranty fund clan of this legally closed, upon all the property and assets then
chapter as herein provided, all the depositors of said in possession of such bank or trust -company: Provided,
bank or trust company as specified in Article 44S, however, That any deposits 'on which said bank was
except as hereinafter provided, shall be paid in full paying interest and any other deposits or debts not
are entitled
out of the cash in said bank or trust company that insurqd under this chapter, and win
edto
and
can be made immediately available and the remainder share Tit the assets shall share in
pro rata or as
shall be paid out of
depositors guaranty fund proceeds of such assets and collec
through the said hoar
the event the mei available may be provided by law."
in said fund shall be in
ient: Provided, however, That
no deposit upon whic
erest is being paid or con- Sec. 177. National bank receiver to refund amounts
paid depositors out of guaranty fund.
tracted to e paid,
r directly or indirectly by
said hank,
office
ockholders to the depositor
"In the event the depositors' guaranty fund, or any
and no de
sec
any way shall be insured part thereof, shall be used by said banking board to pay
under this
r.
rtificate of deposit, whether off the depositors of a national bank which has acbearing i
or
at shall have been changed cepted the provisions of this law, then said banking
to a noni
bean
d unsecured deposit within board shall receive from the receiver, or other officer in
90 days p
the do ng of a bank by the banking charge of said bank, the pro rata share of the proceeds
COMMISSIO
Texas "shall be insured under this of the assets and collections which would be due said
chapter.
posit of public funds of any kind or depositors to the amount so paid by the banking
character, w
er interest bearing or not, deposited board."
in a State b
shall be insured under this chapter.
By the term
ublic funds' RS herein used shall be Sec. 196. State banking board created; powers, etc.
meant funds
onging to the State of Texas, to any
"A State banking board is hereby created, which
county or politiCal subdivisions of the State, municipal
corporation, road districts, school districts, drainage board shall be composed of the attorney general,
districts, levee districts, or bonded district of any banking commissioner, and the treasurer of this State.
kind: Provided, however, That the defining of public Said board shall have the control and management of
funds herein shall not be exclusive, and any funds the depositors' guaranty fund hereinafter provided for,
corn'
i
g fairly under the definition of said terms shall and shall have the power to adopt all necessary rules
regulations in harmony with this chapter for the
not
protected under this chapter. Cashier checks, and
bank 'drafts, or exchange issued against or arising management of said fund. Said board shall have the
from bona fide unsecured and noninterest bearing general supervisMs and control of the depositors' bond
dep
shall be protected under the guaranty fund. security system provided for in this chapter, and shall
No
.osit made by a creditor for the purpose of have the power of the regulation, control, and supercon
Ing a loan held against the debtor bank into vision of all State banking corporations and trust coma n uterest bearing and unsecured deposit shall panies as hereinafter provided in this title."
be
ected or bisured under the guaranty fund.
CHAPTER 8. BOND SECURITY OF BANK DEPOSITS
The
ners of deposits not insured under this chapter
sh
nly receive the pro rata amount that may be Banks electing bond security to file bond—Change
real!
from the assets, resources, and collections
from guarantee fund system to bond secured system.
of
from such banks and trust companies, and
"Each and every State bank or trust company
stoc olders or directors."
now or hereafter incorporated under the laws of this
State, which shall elect to come under the provisions
Sec. 175. Issuance and guaranty fund protection of the bond security system of this chapter, shall, on
denied noninterest-bearing certificates of deposit. January
1, 1910, and annually thereafter, file with the
"No State bank or State bank and trust company commissioner of insurance and banking and his sucorganized and doing business under Title 14, Revised cessors in office, for and on behalf of the lawful deCivil Statutes of 1911, or any amendments thereto positors of such bank, a bond, policy of insurance, or
of the general laws of the State of Texas shall be other guaranty of indemnity in an amount equal to
allowed to issue any noubliterest bearing certificates the amount of its capital stock, which said bond, policy
of deposit. In the event that any State bank or of insurance, or other guaranty of indemnity shall be
State bank and trust company shall issue any non- for and inure to the benefit of all depositors. Such
interest bearing certificates of deposit, such deposits, instrument and the security thereby provided shall be
or certificateeof deposit, shall not be insured or in approved by the county judge of the county in which
any way protected by tile guaranty fund law of the such business is domiciled, and shall take effect and
State banks of Texas, lor the bond security law of be in force from and after it is approved and filed in
the State banks of Texas."
the office of the commissioner of insurance and bank-
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Federal Reserve Bank of St. Louis
•
SEPTEM BER, 1925
FEDERAL RESERVE BULLETIN
ing. Every such corporation shall comply with the
provisions of this chapter as herein provided, and
every such corporation that may hereafter be incorporated shall comply with the provisions of this chapter
as to the depositors' guaranty fund plan or the bond
security system, on filing its charter, before it shall bp
permitted to receive deposits: Prom(led, That any
bank or bank and trust company that may have elected
to secure its deposits under the depositors' guaranty
fund, provided for by this act shall have the right,
upon making and filing the bond kereby provided for,
to change its system of doing business and its mode of
guaranteeing deposits from the guaranty system to the
bonds security system, as provided by this chapter."
(Sec. 117 as amended by act of Jan. 27, 1925.)
Sec. 118. Bond to secure depositors at time of tiling
and for 12 months thereafter.
"Every such bond or policy of insurance or other
guaranty of indemnity filed as provided for in this
chapter shall secs
"depositors at the time said bond
is filed and approved, and all deposits made during
the period of 12 months thereafter."
Sec. 119. Requirements in case of personal security.
"In case the bond herein provided for shall be executed by personal obligation or security, then in no
event shall such bond be deemed adequate and sufficient unless and until it shall have been executed by
at least three different persons or individuals of financial responsibility and solvency, satisfactory to the
authorities herein authorized by this chapter to approve
such bond."
Sec. 120. Who may make bonds, etc., and who may not.
"The bond or other form of guaranty provided for
in this chapter may be made by any person, firm, or
corporation authorized to execute the same, and any
and all corporations incorporated under the provisions
of articles 380 and 381 shall be and they are hereby
authorized and empowered to execute such bonds or
guaranties, either singly or collectively, subject to approval as heron provided for: Provided, That any
such corporation which is at the time operating under
the guaranty fund system provided for by this chapter shall not he accepted as a surety on any such bond."
Sec. 121. Who may take advantage of bond security
syitem—Shall file bond—Requirements—Approval—
Certificate.
"Any person, firm, or corporation other than as described in article 445, transacting lawfully a banking
business in this State, or lawfully receiving funds on
deposit, shall be authorized to take advantage of the
provisions of the bond-security system of this chapter
and to file with the banking commissioner a bond or
policy or other guaranty of indemnity. Any such
corporation shall, in such event, file a bond or policy
of insurance or other guaranty of indemnity in like
manner as it would be required to file if incorporated
under the laws of Texas.
"Any such person or firm transacting the business
of a private bank shall, in such-4sent, file a bond or
policy of insurance or other guaranty of indemnity in
any amount to be fixed by the banking commissioner,
which amount shall in no case be less than one-half the
amount of the average of the daily deposits with such
person or firm for the preceding period of 12 months:
Provided, That no person or, firm shall be permitted to
tales the benefit of this article unless such person or
firm shall have been engaged in such business in the
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Federal Reserve Bank of St. Louis
655
State of Tykes for ,a period of at least 12 months.
Provided, That any such person, firm, or corporation
shall submit to the commissioner of banking such reports and statements concerning its deposits and concerning the solvency of such bond or policy of insuremit or other guaranty of indemnity as he may require, in order to enable him to determine the sufficiency of such bond or policy of insurance or other
guaranty of indemnity, and shall pay all such reasonable expenses as may be incurred by him in the making of an examivation thereof: Provided further, That
such bond, policy of insurance, or other guaranty shall
be approved by the county judge and filed with the
banking commissioner as provided for in article 491.
"Upon the filing of such bond or other form of
guaranty it shall be the duty of the commissioner to
furni:,11 a certificate of such fact."
Sec. 122. On default by bond, etc.—Secured bank—
Duty of commissioner, etc.
"In the event of default by any person, firm, or corporation transacting such business or receiving deposits, -which shall ma" exeCtIte, or file the bond or
policy of insurance, or other guaranty of indemnity
provided for herein, in the payment of .a deposit lawfully demanded, it shall lie the duty of the banking
commissioner, when su
suit shall be made known
to Mk, to at once mak
zamination of such bank,
and if in his judgment t
insolvent he shall take
charge of such bank as
by law for the liquidation of State banks.
gnet!tiddarcharge of a bank as
above provided, the banking commissioner shall at
once give notice thereof Aceeitch and all persons who
may be obligated by reason of such default, and of the
conditions of such bond or policy of insurance or other
guaranty of indemnity, and upon such notice the full
amount of the same shall thereby become due and
payable within 60 days."
Sec. 123. Sureties, etc., to pay commissioner full
amount of bond, or, etc., in trust for depositors; to
t be paid pro rata to depositors, etc.
"When any bond or policy of insurance or other
guaranty of indemnity provided for herein shall become due and payable in accordance with the provisions of this chapter, it shall be the duty of the makers
and signers thereof to pay over the full amount of the
same to the banking cominissioner, or such part
thereof as he may demand, to, be held by him in trust
for the depositors, with the person, firm, or corporation
furnishing such bond or policy of insurance or other
guaranty of indemnity. All proceeds Mils arising,
either from voluntary payment or otherwise; shall be
payable to the banking commissioner and shall be by
him promptly paid over pro rata to unpaid depositors
upon presentation to him of satisfactory proofs of their
claims, which proofs shall be received and filed before
payment thereof shall be approved Lv him."
Sec. 125. Foreign corporation as surety refusing to
pay—Permit subject to forfeiture.
,V any corporation incorporated elsewhere than in
the State of Texas shall be the maker or surety on a
bond given under the provisions of this act and shall
refuse to pay within 60 days after demand has been
made by the bank commissioner the full amount of its
liability upon such bond, permission shall be refused to
such corporation to transact business in the State until
it has fully discharged its liability upon such bond, upon
which default was made.
656
FEDERAL RESERVE BULLETIN
Sec. 126. Suit by Attorney General, etc., in case of
default on bond, etc.
"In the event such person, firm, or corporation shall
default in the payment (AA lawful demand, and shall
so continue for the period ofieday-sfrom the beginning
thereof, and the obligations of such bond of insurance,
or other guaranty of indemnity is not discharged, it
shall be the duty of the attorney general, or any district or county attorney, acting at his.dastance, to
bring suit upon such bond or policy of Lisaurance or
other guaranty ofiftindemnity in the name oT the governor, and for the benefit of all persons who may be
beneficiaries thereof by reason of.
its terms and conditions."
iikv of suit on bond—Libation.
Sec. 127.
The act. ovides the venue in which suit shall be
brought open any bond upon which default has been
made and also provides that such suit shall be brought
within 12 months of the date fixed for the termination
of.such bond.
•
Sec. 128. Srety, etc.—Paying, subrogated to rights
of depositors.
"Whenever any maker or signer of any bond, or
policy of insurance, or other guaranty of indenmity,
other than the principal therein, shall be required under the provisions of this chapter to pay over for the
benefit of the depositors with any person or corporation any sum or sums of monerstieh maker or signer
making or participating in sucl*pa3prient snail thereby
become subrogated to the rights of a de
tor to the
extent of the payments so made, and entiWd to assert
suett right in accordance with the laws liff the State
t7econdary and subject to the rights of all depositors
secured by such bond, or policy of insurance, or other
guaranty of indemnity."
Sec. 129. Fees for examination of bank.
The act provides for the fees which the bank commissioner may charge for any examination which it
is necessary to make'in order to determine whether a
bank is authorized to make the bond or to determine
the amount of such bond provided for under this
chapter.
Sec. 130. Form of guaranty bond.
The act sets ot4 the form of bond which shall be
required of banks availing themselves of the provisions
of this chapter.
Sec. 131. Security may be divided into two or more
bonds, etc.
"The security for the benefit of depositors provided
for by this chapter may be divided into two or more
bond/ polices of insurance, or other guaranties of
irideihdity,
'
or any part thereof may be given in either
of such forms of guaranty of indemnity; Provided,
That the aggregate theieof shall he equal to the total
amount of the security .required in aceordance with
the provisions of this chapter."
Sec. 132. Additional security where deposits excessive
(as amended by act of Jan. 27, 1925).
A.
"Whenever the deposits of any Texas banking corporation which has filed a bond or other guaranty of
indemnity with the commissioner in accordance with
the provision* of this chapter shall exceed six times
the amount at its capital and surplus,1,41
be its
duty to furnisliggidditional security for the
on
of its depositors in a sum or sums which shall in the
aggregate be equal to the total amount of such excess
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Federal Reserve Bank of St. Louis
SEPTEMBER, 1925
of deposits above six times the amount of the capital
and surplus of such corporation. If any such corporation shall refuse ,or fail to comply with any provisions
of this article, after demand by the commissioner, he
shall report the facts to the attorney general, who shall
thermpon institute suit in Travis County to forfeit
the,Oharter of such corporation; and such coart shall,
upon hearing and proof thereof, enter a decree and
judgme4 therein forfeiting and annulling the charter
of such borporation."
Sec. 133. Upon failure to give bond, etc.. or avail
of guaranty fund. suit to forfeit charter.
"If any corporation organized under the general
laws of this State to do a banking business or to receive
funds on deposit shall fail or refuse to file the bond,
or policy of insurance, or other guaranty of indemnity,
provided for in Articles 491, 492, 493, 494 hereof,
iwaccordance herewith, or avail itself of the depositors'
gUaranty fund plan as provided in this chapter, it
shall be the dutyf of the banking commissioner to
promptly report such failure to the attorney general,
who shall thereupon institute suit ip the district court
of Travis County to forfeit the charter of such corporation; and such court shall, tipqn hearing and proof
thereof, enter decree and judgment therein forfeiting
and annulling the charter of such corporation."
Sec. 134. New or additional security may be required,
when—Penalty folk failure to give—Powers of
commissioner and attorney general.
"If at. any time it shall appear to the State banking
hoard that any bond, or policy of insurance, or other
guaranty of indemnity, filed as. provided for herein,
by any corporation organized under the laws of Texas,
is insufficient, they sltall have the Atuthority and it
shall be their duty tolequire such obtporation to file
new or additional secUrity in an andount sufficient to
protect its depositors, in accordance with this chapter.
In the event such corporation shall refuse or fail to
comply with such requirements, they shall communicate the facts to the attorney general, who shall
thereupon institute such proceedings and take such
steps as the nature of the case may'lrequire. The
lbanking commissioner and tile attorneygeneral shall,
'In such event, have an exercise, for tM protection of
depositors, all the authority conferred upon them by
article 523, and all authority conferred by the provisions of this title."
Sec. 135. National bank may avail depositors of
protection of bond security system.
"Any national bank in this State may voluntarily
avail its depositors of the protection of the bond
security system herein provided for State banks."
Sec. 136. Certain banks and trust companies created
by special acts, may avail of provisions of this
chapter.*
"Any bank or trust company created by virtue of
a special act of the Legislature of the State of Texas,
now or hereafter engaged in the general banking business in Texas, and which at the time has only one
tame of businesa.
which has heretofore accepted
or may herea
I one or more of the provisions
of this title, thereby submitting itself to the jurisdictlgAge State banking department, may, with the
a
1.5rthe State tanking board, avail itself of
the provisions of this chapter, either RS a bond security
bank, or as a guaranty fund hank, by vote. 'is prescribed for State bank.'
•
Sec. 202. Commissioner shall close banks when disapproved by board; procedure.
"The banking commissioner of Texas shall close
all State banks which the State banking board shall
disapprove and determine not entitled, under the
laws of this State, to transact a banking business, and
shall proceed in such cases in the manner provided
by
law with respect to insolvent banks, unless such banks
shall go into voluntary liquidation."
•
•
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Federal Reserve Bank of St. Louis
•
MEMORANDUM - Mr. Van Fossen
April
29, 1926.
Date law became effective - January 1, 1910.
In February, 1925 the Texas law was amended to permit banks to shift
over from the state's guaranty fund system to its alternative bond-security
system, which had not been permitted theretofore. It is reported that many banks
withdrew from the fund and deposited security bonds since the amendment, whereas only 33 out of some 900 state institutions had originally elected to operate
under the bond-security system. The number of banks operating under the guaranty
fund on May 1, 1925, was reported as 617. On September 28, 1925, the consolidated
report of condition of state bats and trust ciimpanies shows as assets of the
banks: "Interest in Depositors Guaranty Fund - $•3,317,407.20, and "Assessment
Depositors' Guaranty Fund" -- i5,529,039.55. To April 29, 1925, assessments had
aggregated about $16,800,000, while to the end of 1324 about M290,000 had been
recovered from assets of failed banks. There were no unpaid warrants or certificates outstanding and never had been any.
TEXAS:
MEMORANDUM - Mr. Van Fossen
Subject:
January 31, 1927.
Supplement to memorandum of
April 29, 1926, on operation
of state depositgparanty laws.
Practically all the banks elected to operate under the guaranty fund
TEXAS:
plan. Because of the heavy burden of the guaranty fund, 654 banks had changed tthe bond plan by June 1926, leaving 160 banks under the guaranty. Between January 1910 and January 1926 there were 170 failures, 52 of which were reorganized
without loss to the guaranty fund. Up to that time the fund had paid to depositors $17,072,902, all but $1,000,000 of which was paid subsequent to January,
1920. In the period January 1, 1925, to June 1926, 88 state banks converted
into national banks, one of them being the largest in the system. (See Commercial West, October 25, 1926).
TEXAS
The Financial Age for March 31, 1928 in reviewing the history of state deposit
guaranty funds over a period of 100 years in a series of articles of which the
one herewith summarized deals with the Texas condition, states that as a whole
the system has been a dismal failure.
•
The condition in Texas at the present time seems to be the result of a series
of trials of different phases of the Guaranty fund system by state legislation
and has culminated in the realization that the system is not a solution to the
banking problem in Texas, and in legislation abolishing it. However, monies
previously deposited by members of the fund have not been refunded, and herein
lies the difficulty, inasmuch as the present status of the fund is not definitely determined.
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Federal Reserve Bank of St. Louis
-1•
-2-
W. Gregory Hatcher, State Treasurer, makes a report on the situation
stressing the items to be taken into consideration before refunds are made. In
the first place, there were $900,000 over-assessments made by the Guaranty fund
commission prior to repeal of law in February 1927. Of this amount $268,000 was
withdrawn from banks by Banking Commissioner and turned over to Treasurer. The
remainder is deposited in the banks selected by the present banking commissioner,
and no attempt has been made to refund this money, even though they have been
authorized to do so by the Banking Commission.
The second item dealt with,the payment of $789,232 interest in the
&rid, is also undecided. The Banking Commission authorized payment to certain
banks withdrawing from the system in September 1926 of the above amount, but
this action was later restrained by court injunction issued by court action brought
by depositors of a failed bank in Belton, Texas.
The third item is the $258,000 assessment made against certain banks
for payment of depositors of nine failed banks during September 29 to December 31,
1926, although at the time the State Treasurer held in the vaults $2,000,000 of
the Deposit Guaranty fund for this purpose. Mr. Hatcher, opposed the collection
of the assessment levied until funds then on deposit had been paid out, inasmuch
as (1) the banks were in need of ready funds, and (2) also that even when collected the funds would probably repose in vaults of the treasurer for some time before
release to cases of failed banks.
•
State
SUMMARY OF THE GUARANTY BANK DEPOSIT LAW - October 1 1929.
Voluntary
Date
Remarks
Effective
or compulsory
1910
Texas
"IEMORANDUM - Mr. Poster
Compulsory, but
optional as to the guaranty
or bond security plans.
Guaranty plan was
practically abolished in 1925 when
most of the banks
subscribed to the
bond security plan.
On Feb. 11, 1927,
that law was repealz-
April 1, 1930
Review of the Guaranty Law Sistem in 8 States.
In 1909 the Texas compulsory guaranty plan was introduced, and some 750
TEXAS:
state banks entered the system. For the first ten years the law found popular
support. Depression and hard times came in 1920 and in the next six years 150
guaranteed banks failed. Solvent banks were compelled to pay about $19,000,000 of
which $4,000,000 was recovered from assets of failed banks. Assessments were levied
to an amount equl to 2 per cent of average daily deposits. Stockholders and depcharters. The
ositors demanded relief, and many bankers subscribed to national bank
•
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Federal Reserve Bank of St. Louis
- 3•
•
The legislature practically abolished the guaranty system in 1925 by the establishment of a bond security plan. Immediately all the banks, with the exception
of 25, left the guaranty fund; 654 changed to the bond plan and 88 became national banks. The law was repealed on February 11, 1927. According to a statement made by the liquidating supervisor of the Texas guaranty fund, February 16,
1929, nine banks with total deposits of $900,000 have not been paid. Several
cases, involving the guaranty fund, are in the Supreme Court. If the decisions
are favorable, it will mean that the creditors will receive about 75 per cent;
if unfavorable, the creditors of these nine institutions will get about 50 per
cent.
•
•
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
VIII. TEXAS
In Texas state banks were given the compulsory choice of securing
their depositors by the guaranty fund system or a bond security system.
This law went into effect in January 1910.
Under the bond security system banks electing this method were required to furnish a bond, policy of insurance or other acceptable guaranty
of indemnity, in an amount equal to their capital as additional security
for depositors. Provisions for maintaining adequate and satisfactory security, and for increasing the amount of the bonds as deposits increased beyond a specified ratio to capital, were set up. Only about 40 banks with
capital of approximately ,000,000 chose this method and the number
remained about this level until 19515.
The remainder of the state banks, numbering about 475, adopted the
guaranty fund system. The Texas plan was distinguished from others
by the high rates of its assessments and the size of the fund it sought to
create. Established banks on becoming members were required to deposit
in the fund 1 per cent of average daily deposits for the preceding year,
and new banks 3 per cent of capital and surplus. Regular assessments
were 1/4 of 1 per cent of average daily deposits until the fund should reach
$5,000,000. In case of depletion of the fund or of an emergency the State
Banking Board was empowered to levy 2per cent of average daily deposits,
this being the maximum for any one year. All public, secured and interest
bearing deposits were excluded from the guaranty so that its protection
covered, it was estimated, less than half the total bank deposits.
In this state the minimum bank capital on organization was $10,000
in places of less than 800 inhabitants, with a rising scale for larger places.
The State Banking Board was given full discretion in granting new charters
[ 35
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Federal Reserve Bank of St. Louis
on the basis of the public expediency of proposed new institutions and the
character of their organizers.
The Boom in State Charters
Despite these restraining powers a rapid rise in state banking ensued
after the adoption of the plan up until the inevitable turning point of the
1920-21 economic reaction.
In 1910 there were 584 state banks with deposits of $42,100,000. National banks numbered 485 with deposits of $104,900,000. Thus state banks
constituted about 55 per cent of the number of banks in the state and held
about 29 per cent of the deposits. There were at this date 3640 persons
per bank in the state. By 1920 the number of state banks had increased
to 992 with deposits of $297,100,000. This was a growth of 408, or 70 per
cent in numbers, and $255,000,000 or 605 per cent in deposits. National
banks had increased to 520, with $339,800,000 in deposits, a rise of only
35, or 7 per cent in numbers, and of $234,900,000, or 224 per cent in deposits. State banks now constituted over 65 per cent of the institutions
and held more than 46 per cent of the deposits as compared with 29 per
cent ten years earlier. The number of persons in the state per bank at this
stage was 3080.
During the first 10 years of the guaranty plan 17 state banks failed
with total liabilities of $2,370,000. In this period 4 national banks suspended. The amounts withdrawn from the guaranty fund to pay depositors of failed member banks amounted to $880,000. In view of these
external aspects, the plan was hailed as a great success.
Inwardly, however, fostered by public confidence that deposits in any
state bank were safe owing to the guaranty, serious weaknesses were developing. One was the chartering of an excessive number of small banks.
As an instance, during the year ending August 1912, 82 institutions were
granted state charters, and of these 40 had the minimum capital of $10,000; 52 had capital of $20,000 or less. Again in 1914, when there were 867
banks, 249, or almost 29 per cent, had the minimum capital of $10,000;
455, or 52 per cent, had capital of $20,000 or less.
Writing on the effect of the plan W. A. Philpott, Jr., Secretary of the
Texas Bankers Association, said that after the guaranty plan was adopted
there "began the period of wildest promotion, the greatest bank expansion
Texas had ever seen," and that it was the signal for numerous persons of
no banking experience "to open a bank and offer the depositing public
the same degree of safety afforded by the old, well-established, conservative banker with ample capital and seasoned experience. ... Banks were
organized in every town and hamlet until the peak of more than 1000
banks was reached. Every one hung out the sign 'Guaranty Fund Bank'
[ 36
411..••••161.
and was allowed to advertise the statement that no depositor had ever
lost a dollar in a guaranty fund bank in Texas."
The booming prosperity of this first decade of the fund made its assessments an easy burden for the banks to bear, distributed as it was over
almost a thousand institutions, and even banking opinion is reported as
having generally been won over to the belief that the plan was sound and
helpful.
1
Bank Failures Under the Guaranty
However, in the six year period, 1920-25, about 150 guaranty fund
banks failed. Of these,52 were reorganized without loss to the fund. Under
the Texas plan no certificates were issued to depositors, but when a bank
was taken over by the banking department and liquidation begun, depositors were paid until its available cash was exhausted, then the guaranty
fund was drawn upon, and as it became depleted assessments were collected from the banks up to 2 per cent in a year of their average daily
deposits. By this process about $19,000,000 was pumped out of member
banks in 1920-25; final liquidation of the closed banks returned about
$4,000,000 to them, leaving their net losses at $15,000,000.
While this system took care of the depositors, it threatened to wreck
the banking structure as a whole. Enforced guaranty fund assessments
reduced and in some cases eliminated dividends, cut into surpluses and
even impaired the capital of solvent banks, until both stockholders and
depositors in all state banks became alarmed for fear their institutions
would be dragged down also.
Desertion of the Plan
The situation became so acute that in 1925 the guaranty law was
modified so as to permit banks to shift over to a new bond plan whereby
they could obtain relief from guaranty fund liability by furnishing a bond
in the amount of their capital stock. All the state banks, with the exception of N whose condition was too weak to furnish the required sureties,
left the guaranty system at once, 654 changing to the bond plan and 88
converting to national charter.
The bond security plan was later made ineffectual by a Texas Supreme
Court decision to the effect that under the law as amended the Bank Commissioner must accept government and municipal bonds which were part
a bank's assets in lieu of a surety bond,and in 1927 the law was repealed.
•
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I. Reserve Bank of St. Louis
Federal
•
TEXAS BANKERS' JOURNAL and SOUTHWESTERN BANKERS' JOURNAL
Volumes not received from Library of Congress
1
r
1/14) /6(
•
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Federal Reserve Bank of St. Louis
g 6,0L-01 /4/
c.--) tag-
Cti<4, I
17-.2-O
7
•
1.
vol. 7. Oct. 1911, p. 62. Reports first assessment to replenish guaranty fund, made
•
necessary by failure of the Harris County Bank & Trust Co. Rate being.0229586 per
osnt on current deposits.
Oct. 1912, p. 43.
fund.
Gives some figures from Commissioner Gill's report on the guaranty
Vol. 8 and Vol. 9. Nothing noted. nth Oct. 1913 issue Journal became St. Louis Banke:
Vol. 10. Oct. 1914, p. 25. Reports plan submitted
Colquitt for a "Bank of Texas", capitalized at 620
financial emergencies, administer permanent school
State bank guarantee fund and as reserve agent for
Vols. 11, 12,11
ols. 14-22.
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Federal Reserve Bank of St. Louis
Nothing noted
Not received from Library of Congress.
gas. 23-25, for 1927-1929.
•
to legislat*re by Governor
million, to enable State to meet
fund, and act as custodian of
State banks.
Nothing noted.
NOTES ON TEXAS BANKERS' JOURNAL and SOUTHWESTERN BANKERS' JOURNAL
"e deposit guaranty in Tales - page 3!
TEXAS BANKERS' JOURNAL - 1907-1916
vol. 1,1907.
/9.?
(then changed title)
tfirst issue, February).
Feb. 1907, Pp. 14-15. Lists 157 banks organized since new law of Aug. 1905 (to
Dec. 2), 1906).
March 1907, p4 10. In editorial. "The most objectionable feature of the Blanton
bill is that of taxing State banks to create a sinking fund for the ostensible
purpose of indemnifying depositors in case of a bank failure, and the unject
discrimination of the percentage of taxation against banks of small capital."
Same issue, p. 23. Briefly summarizes Blanton bill, and comments. "By the
above arrangement it will be seen that instead afthereceiver being compelled
bythe exigencies of the case to realize quickly upon the assets of the bank, he
could take time and irk them out tothe best possible advantage, hence the loss
to hanks would probably be less than at present. From the proceeds he could
return to the State tr-asury the money paid out, ad tWer esidue, if any, be
handed back to the stockholders."
(QUERY. Consistent?)
Sept. 1907. Editotial, "That Petite, So-Salled 'Official Organ' of the Texas
Bankers' Association." A b;tter attack on The Texas Banker as a worthless sheet
that does not carry advertisments of any Texas bank.
(NOTE. The Texas Banker
was an older journal, having been started about 1902, and had apparently objected
to the similar title taken by the new journal. The Texas Bankers' Journal was
chiegx #0041ingomgnqstes about banks and bankers, with some interesting short
notes7burwItr6ut any serious articles about banking problems (at least in
early years).)
VOL. 2. Feb. 1908p p. 10. Editorial, "The Iftevitable". Thinks the "guaranteed
deposit system inevitable despite strong opposition, as greatest statesmen% of the
day are for it. Agrees that itappears unjust to tax all other banksii to pay
deficit of a defunct one, and looks like giving a free lance or license to a
abnkr to tail/ "In the enactment of such a law either by the Federal or State
government, there should be affixed a penitentiary penalty for any banker who
falls; for really, there is no accasior for any conservative, honest banker to fail,
Same issue, p. 12. Brief note that everyone mill be watchinF the Oklahoma law.
March 1908, p. 10. In editorial, says Senator Culberson (U.S. Senator from Texas,
as presented one of the best bills in Congress for guaranty of deposits.
Same issue, p. 20. ,Olotes„ apparently with approval, from speech of C. F.
E±ie, Pa, favoring deposit guaranty for national banks.
July 1908, Editorial, p. 8. Reports Commissioner Love and State bankers determined
to obtain a deposit guaranty law—none opposing it. Also favor a s parate State
Bankers Asseckation. Love thinks deposit guaranty will make bankers more conserveBut Journal thinks there will be a bitter fight.
tike, as all eyes will beon him.
Same issue, p. 10. Gives opinion'S' re:seised from bankers, mostly ppposed.
pp. 25-26. Letter signed by George W. Riddle, Dallas, and James
Garitty, President First National Bank, Corsicans, favoring deposit guaranty, and
estimating premium rate in national banks would have been about 1/10 of 1 percent.
Thinks argument that would be more "wild-cat" banking is fallacious. "Under the
system of guaranty the whole banking fraternity wouldbe more castreful and a stricter
provision would be established, but the strongest and most potent reason for the
reckless man not getting ..nto the business would be found in his being unable to
induce men with means to take stock with him in any banking venture." Also thinks
guaranty better than a postal savings system, which is the alternative.
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Federal Reserve Bank of St. Louis
Notes on Texas Bankers' Journal
-
re deposit guaranty in Texas
- page 2
AUff118t,
Vol. 2 continued. Amax 1908,
p. 12. Describes platform of national
Democratic Party - that endorsed deposit guaranty- with the comment. "So far as
relates to banking and finance the planks seem both stable and wise. The Journal
regards with unstinted favor the following on BANKING. " Platform includes:
"We pledge ourselves to legislation under which the National banks shall be
required to establish a guaranty fund for the prompt payment to the depositors of
any insolvent national bank under an equitable system, which shall be available
to all State banking institutions wishing to use it."
Same issue, p. 16. Reports vote taken by secretary of
Bankers Association shoving 210 in favor, 182 against, guarantee of bahk deposits.
190g• 10.
Sept.
. Editorial notes difference in Republican and Democratic views, with
cartoon "The Differmce--Uake Your Choice. fluaranteed Profits for he Few. Guaranteed
Deposits for the Many."
Se page comments on article by Hon. S. B, Cooper,
as one of the best editor has read. Cooper thinks it not sound in principle or
wise in policy and is socialistic.
Next page, gives Taft's view, opposing.
Oct. 1900, Editorial, p. 11, "The All-Absorbing Issue." Contrasts views of Bryan
and Taft, and quotes from "a very able article against the guarantee of national
bank deposits" by T. P. Kane, deputy comptroller of the currency.
411
Nov. 1908, Editorial, "06 Pgsition," p. 10. "As to the position of this Journal,
we here declare that we prefer the guarantee of bank deposits to the postal savings
bank, which 411 surely be the result of the election of the Republican csadidato
for president." Notes that bankers thvougpout the country oppose both, but that it
seems that the business men of the country orefer deposit guaranty to postal
savings. Notes also that the Merchants Association of New York City three times
petitioned Congress during the last session to adopt Fomler's bank deposit guarantee
bill. "Therefore the Journal feels safe in the expression of its belief that the/
guarantee of deposits woule be far more beneficial *Ilan the postal savings bank
plan, and goes on record as such."
Dec. 1908, Editorial, "The Die is Cast", pp. 3-h. With Taft's election postal
savings system is sure to come. This is makes State guaranty laws essential. "Only
inthis way can the State banks hope toretatn tbe deposits which will unquestionably
go to the postal savings banksi" (p. h).
Vol. 3. Feb. 1909, pp. 6-7,i Summarized talk by Love before State bankers meeting,
favoring deposit guaranty.
Mar, 1909, p. 5. Brief editorial that the diei seems cast. Kansas and Nebraska
passed guaranty bills in March, Missouri and a half dozen other states tryin - t
do so, Governor of Texas made this a mxesizi feature of his call for special sesson/
But on next page another brief editorial notes that if the lack of interest shown
in the meetings of the house committee is any indication it can safely be assumed
that it is a "dead one."
•
April 1909, p. 10. Whhle page re talk by Judge F. O. Dunlap, of Waxahachie,
opposing deposit guaranty and criticising Love's talk.
enacted
June 1909, pp. 9 and 13. Summarizes bill pizzsi by legislatarei (May 12) for
deposit guaranty.
August 1909, p. 8. Summarizes bank laws of last legislaturev-mostly re supervisory
and re ulatory provisions.
Nove.ber
and that
at
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Federal Reserve Bank of St. Louis
191imitom13. (Jives ruling of State Banking Board re payment of assessment.
no
*Iry bank may have same office as another bahk.
Notes on Texas Bankers' Journal
- re deposit guaranty in Texas
- page 3
Vol. 3 continued. 2i Dec. 1909, p. 8. Editorial, "Speculative Thoughts on the
•
Bank Guarantee System." 500 out of 540 State banks have accepted guaranty plan.
Congratqates Love onlay he has worked for the law and getting the system started,
and hopes he will not resign.
with 493
Vol. 4. Ja0.1910. P. 8, notes that new law will be effective Jan. 4,
B.
Thomas
of
n
resignatio
reports
,
0
3,9
1
ruaranty fund banks and 42 bond banks.
Board
(notes
Banking
State
by
adopted
5-9
Love as Commissioner. P. 11, prints riles
Gives
state23,
P.
notes).
--see
Austin
at
and excerpts from these rules were made
ment by Love, dated Jan. 3, stating that $359,696 was in the guaranty fund, onefourth in cash; also referringto to rate of loss in failed national banks in Texas;
and stating that no depositors in State banks, since beginning of system in 1905,
had lost anything. P. 24, report by State Banking Board dated Dec. 29, that every
state bank had been examined during the quarter.
Feb. 1910, p. 40, reports three bond banks and one guaranty fund bank had failed
to make the reports due in order to come it thin the law at the teginnirr: of the year
Action to be talien byattorney-gen ral.
i
Mar. 1910, p. 9. Quotes from report of Bank Commission. r Hawkins, showing that
reports from the banks as of Dec. 31, 1909, showed a total of 33,99L1,L90
noninterest bearing and unsercured deposits in all guaranty fund banks; and
aggregate deposits of all State banks of $50,944,104.
July 1910. Cover and 0. 12. Announc d absorption of (merger with) the Texas Bankeer,
41/
Oct. 1910, p. 17. Reports notice sent by dept, of insurance and banking, to membere
of guaranty fund re final payment of assessment due by Nov. 1.
Dec. 1910, p. 37. Reports that guaranty fund is about $450,000, will be increased
to about1550,000 with payments due on January 1.
•
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Federal Reserve Bank of St. Louis
Notes on Texas Bankers' Journal
•
*
re deposit guaranty in Texas
-
page /7(
Vol. 13. Jan. 1913. Editorial, p. 11, refers to those who started the Texas
Bankers Recond (State bankers association) as "conspirators and maligners."
(NOTE. Why there should be suci hostility--in view of the difference in character
of the journals--is difficult to understand.)
Feb. 1913, p. 26. Quotes opinion of Hepburn, President of Chase National Bank, on
deposit insurance, re such roposals in connection with the Aldrich bill. "I think
you gentlemen can be assured at the outset," he said, "that you will have the
sympathetic co-operation of the banking and business interests of the country."
"If you think the guarantee of deposits would stop runs on banks, the sooner you
get the idea out of your head the better," said Mr. Hepburn. "When the people want
money, they want it, and nothing else will satisfy them. A guarantee would count
for nothing at all."
To guarantee deposits, he added, would put a premium on recklessness, and to
impose a tax to guarantee deposits would be to make good bankers responsible for
the actions of bad bankers."
Apr. 1913, p. 18. In a group of breif notes. "Is the guarantee State banking law
of Texas being successfully operated? We say yes."
Vol. 14. Jan. 1914, p. 26. Brief quote from Commissioner's report in the guaranty
fund, noting balance, and that fund was not used during 1913, though three banks
closed and ere li,uidated because of mismanagement, irregular transactions, etc.
Feb. 1914, p. 12. Brief article noting that Amin= unsuccessful effort was made
to insert a guarantyxovision in the currency act, and quoting a predicion of W.J.
Bryan that such a provision would ultimately be adopted.
•
Mar. 1914, p. 26. brief note re guaranty fund statement, fund now close to $1
million. Also notes reopening one one closed bank (Lockney State Bank of Lockney)
wtthout disturbing guaranty fund.
July 1914, p. 28. Gives abstract of opinion in case of W. W. Collier et. al 17wer.
E.L. Smith, growing out of closing of First State Bank of Amarillo. Upheld o
of commissioner to make assessment on a bank's stockholders.
Sept. 1914, p. 29. Reports amounts used from fund in four failures.
Vol. 15.
Nothing noted
Vol. 16, Jan. 1916, pp. 9-10. Quotes from an article by Commissioner on 6 years
of the guaranty fund. Givesdata on assessments, payments to depositors, and states
that in every case Where a bank has failed(seven) the State banking laws had been
violated.
/
v
VW,011
.
•
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Federal Reserve Bank of St. Louis
•
ik.‘, /7,/[ t
Notes on Southwestern BAnkers Journal - re deposit guaranty in Texas
•
-
page
-
Reference to failure of Denison Bank & Trust Co.
Vol. 21, Aug 1901, PA 324.
amount
of deposits.
See worksheet note for
Nov. 1921. Reports adjustment to be made in guaranty fund to increase to s5 million.
Vol. 22. Feb. 1922, Group meetin supplement, sx not paged. Article by T. N. Maurii!
"State Banking Laws of Texas Need Amendment" recommends reducing loan limit from
25 to 15 percent of capital and surplus, and prevention of holders of time certificates turning them into demand Wien a bank is in danger of failing.
Vol. 23, Jan. 1923, p. 20. Reports J. L. Chapman succeeded Ed Hall as banking
commissioner on September 1st.
Note. July-Dec. issues reported not received by Library of Ccngress.
July
Vol. 24. Jan,/ Apr. June Issues missing.
Aug. 1924, pp. 316 and 318. "The Guaranty Fund," by Ed Hall, former Commissioner.
Briefly reviews character of law, notes that few banks failed until late 1920, but
about 75 since that time. Estimates cost to participating Winks, after about 40
or 50% dividends, at Spout 5 to 7 millions, in four years time. Notes that many of
the banks are still carrying the assessments in full as assets, and if charged off
capital would be impaired. Tilimks modification of the law is needed.
•
Sept. 1924, pp. 11-12. "The Guaranty Fund System," by P. L. Thornton, President
Mercantile Bank & Trust Co., Dallas, and Pres of Texas Bankers Asso. Says system
created too many banks and too few bankers. "...many unscrupulous men had entered
the business for numerous reasons, the principal one of whichwas that the public
was protected by the good and solvent banks and offered as plendid opportunity to
embezzlers and pilferers." Notes difficlty of convicting a banker for wrecking a
bank. Concludes that the system is economically unsound, unworkable and unfair.°
Same issue, p. 20. S.:mmary of report by Commissioner re progress of liquidating.
Same issue, pp. 24-25. "Should 0 r Banks Be Audited?" by J. L. Chapman,
Commissioner of Banking. Urges banks-to have audits every year or two. "We have
stated from the rostrom, as well as in articles, and letters, that we confidently
believe that 70% of our bank failures the past four years are attributable to
rascality and speculation. An audit will detect and locate prastically all ths
looting and a good per cent of the speculation." A bank examiner in two days in
a country bank cannot rundown and locate all irregularities. Thinks the banks
could save 50% of their guaranty fu d assessments by audit procedures.
Oct. 1924, pp. 10 and 33. "Whjrthe Guaranty Fund Law in Texas Should De Repealed,"
by W.C. Page, Pres. irst state Bank of Somerville. Usual srguments in opposition.
January 1925,
Vol. 25.p. b. Reports appointment of Chas. O. Austin as Commissioner to succeed
J. L. Chapman.
Same issue, p. 8, "Guaranty Fund Statistics." See photostat
•
Apr. 1925, pp. 11-13. Reprints asg statement by Commissioner Austin to the state
bankers, as a general reply to inquirkss re conversion to the bond security system.
Re the guaranty fund. "This fun* is in a very substantial and satisfactory condition1
the permanent fund exceeds t4,000,000, one-fourth of which is in cash in the treaury,
and the remaining three-fourths on deposit with the member banks subject to our
check at any time. The volume of deposits subject to assessment is ample to take
care of the situation even should we have failures which we do not now anticipate.
To the best of my knowledge and belief at the present time all of the hafts about
which the department has had any serious concern have closed and are now in process
of liauidation. Most of these failures were banks known to this department to be
absolutely insolvent for a long time, but wkich appear to have been kept open with
the hope that they might work out their own salvation. Bank failures do not develop
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Federal Reserve Bank of St. Louis
Notes on Southwestern Bankers Journal
-
re deposit guaranty in Texas - page 6.
over night, but a re usually the result of conditions well known and fully
recognized for a long time before the crisis develops. None of the failures
which have occurred soar this year should have been any surprise to any person
havng access tothe abnk examiners' reports and most of them should have been no
surprise to the public at large for the reason that the banks have been notoriously
insolvent and generally discussed in the communities Where theyexisted for many
months prior to their closing. Most of the banks Which have been on special
examintition in the department for some time past have already been reorganized or
all (sic) in process of being reorganized by the payment of cash and the elimination
of bad assets, or by the estAblishment of a new bank to take over the good assets
Ind assume the deposits of the failing one, and in cases where this is done, the
reorganization is accomplished without any cost whatever to the guaranty fund."
Urges bankers to use caution in deciding whether to change to the bond
(p. 11).
security system, or to national banks. Notes that some bankers have furnished bonds
and are chaning to the bond security system, and that a proceeding in mandamus is
under way to require the department to accept U.S. of municipal bonds, hich may be
taken from and retained in the ownership a the bank.
June 1925, pp. 6 and 20-22. Address of R.L. Thornton, Pres of bankers asso. Refers
to big legislative problem, and progress made in righting the economic fallacy of
deposit guaranty.
Vol. 26.
Nothing re deposit guaranty noted
Vol. 27. Nothing re deposit guaranty.
to The Southwestern Banker
•
W th issue of April 1927, changed title
Vol. 28. Jan-Sept. examimed. Nothing re deposit guaranty
Vel. 28, Oct.-Dec. and Vol 29 (for 1929) not received.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
Selected items from Bibliography to Lindemann's The History
of Insurance of Bank Deposits in Texas by State Agencies
S
Minutes of the Meetinp of the Board of Directors of the Bank Deposit
Insurance Company, Austin, State Banking Department of Texas, 1933-1()37.
p
Report of the Commissioner of Insurance and Banking of the State of
701)E./L„.57—
1909-22.
Co.,
Boeckman-Jones
Von
Austin,
1916-22,
1909-14;
Texas,
Texas Auditor and Efficiency Expert, Report on the Bank Deposit Insurance
Company, Austin, Texas State Auditor's Office, October, 1935.
Barnes, C. E., The Depositor's Guaranty Fund System of Texas, The
University of Texas, M.B.A., Thesis, 1924.
•
Bulletin of the University of Texas, 1916; No. 53, Platforms of Political
Parties in Texas, Austin, The University of Texas, September 20, 1916.
Guaranty Fund Bulletin, Dallas, Guaranty Fund Association, 1923-24.
Patterson, J. S., Six Years of the Guaranty Fund, Its Operation and
Effect, Senate Documents, Vol. 64, Washington, D. C., U.S. Government
Printing Office, 1916.
Richardson, T. C., East Texas Its History and Its Makers, Vol. III, New
York, Lewis Historical Publishing Co., 190.
The Dallas Morning News, Dallas, February 10, April
January 24, 1925; March 3, 1933.
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Federal Reserve Bank of St. Louis
6, May 7, 1909;
@FedFRASER