Owing to the general popularity of deposit guaranty, and particularly to the pressure brought by banks of Kansas near the

Oklahoma line, which felt a migration of deposits to the guaranteed Oklahoma banks, the Kansas legislature (Republican) in 1909 enacted a guaranty law. Some of the salient features of the Kansas plan are these.

The system is voluntary; any incorporated bank, a year old and having a 10 per cent surplus paid up and unimpaired, may join, but before admission it is subjected to a rigid examination by the State Bank Commissioner, and as evidence of good faith it is required to deposit $500 in cash or in national, state, or municipal bonds for every $100,000 of deposits. The state does not attempt to pay depositors cash immediately upon default of the bank, but issues certificates of indebtedness bearing 6 per cent interest. It then liquidates the bank and applies the proceeds in payment of the outstanding certificates. These certificates are regarded as a good investment and are particularly sought after by the banks as a means of getting new customers.

Provision is made for contributions to a fund large enough to cover the ultimate losses, for immediate payment of deposits is not made. The law fixes the annual assessment at 1/20 per cent of the average daily deposits, less capital stock and surplus; this exemption fosters higher capitalization and the accumulation of surplus. These annual assessments continue until the fund reaches $500,000, when they cease. Thereafter special assessments of 1/20 per cent may be made to replenish the fund when it is depleted by payment of losses - not more than five such assessments, however, being made in any one year. The fund is held by the State Treasurer. Any bank is permitted to withdraw at will, but it must pay its quota of the assessments to cover losses occurring within the succeeding six months.