Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1907-11-29


the plan effective throughout the country
al believe 1t is possible for the govern
ment to give immediate relief by an act OF
Congress, providing for the guarantee by the
government of all deposits In national banks
the banks thus guaranteed to agree to REIN
burse the government for any losses incurred,
and to make this reimbursement in proper
tion to their deposits. The advantage Of
this plan is:
"First-That every depositor in such
guaranteed banks will feel secure.
"Second-The expense of 1t will be paid
by the banks which get the benefit OF it, and
this expense will be small compared with
the benefit gained.
"Third-It can be put into effect immed
ately, and thus restore confidence, and en-.
able business to be resumed.
at is probable that all the national bank,
would be willing to take advantage Of this
guarantee, because the additional security
given to their depositors would be of great
advantage to the banks. During forty
has been small, less than one tenth of pei
cent on the deposits, so small that it would
be an Insignificant tax upon the four or five
billion dollars of deposits. The govern.
ment would have ample security in the
capital and surplus of the banks which
would voluntarily join in the plan. As
each bank would become interested in the
proper management of every other guaran-
teed bank, it would be easier to secure the
legislation necessary for the correction of
such abuses as may exist and for the better
management of the banks-for instance,
legislation preventing over borrowing by
directors and officials of the bank, and leg
islation preventing speculation by officials
ut seems to me that the plan suggested
ought to be acceptable TO the depositors, all
OF whom desire security, and it ought to be
acceptable to the bankers, who will be we'll
paid by the increased deposits for the tax
that may be collected from them to REIN.
burse the government, and do not see that
any objection can be made to the use of the
protected from loss. The only objection
that occurs to me is that State banks might
be less attractive to depositors If national
banks are guaranteed. But there are two
answers to this objection. In the first place,
State banks are likely to suffer If this flnan-
cial stringency continues, and they are,
therefore, interested in restoring confidence /;
In the second place, there is no reason why
State banks should not be protected by a
similar system, under which the State would
guarantee depositors in State banks and
collect the expenses from the State banks
guaranteed.
II proposed in Congress the raising of a
guarantee fund for the protection of deposi.
tors, but the bill was defeated by the larger
banks on the ground that the big would
have no advantage over the little ones II all
depositors were secured. but now that the
big banks are suffering as much as the little
ones, the objection will hardly be made. The
plan WHICH then proposed would furnish
protection as far as the fund would furnish
it, but it would take time to raise such q
fund, and l believe it is better for the gov.
eminent to make the security absolute by be.
coming guarantor, for this system can be
pat into operation at once, and that, too
without expense to the government, mas.
much as the banks would reimburse the
government from time to time in case the
government was called upon to pay the de
posts of any failed bank"