The Washington herald., 1907-11-22

William Jennings Bryan, who came 70
Washington yesterday to attend the we'd
ding Of a daughter OF HIS old friend
Cotter T. Bride. last night gave out a
statement on the financial situation in
which he proposed legislation for the
guarantee By the government Of all de-
posits IN national banks.
This. he declared. would give imme-
date relief. Mr.. -Bryan's statement fol-
lows:
II do not know what the effect OF
the new bond issue will be. but It seems
10 me that the relief ought TO come from
the other direction. The plans so far
have been intended TO furnish govern
ment money to the banks. whereas the
most important thing now IS to restore
confidence in bank depositors. and thus
not only prevent Withdrawals. but Sc
cure deposits.
while the banks are good. and while
the depositors are. not justified IN being
frightened, some depositors are unreason-
able. and their excessive timidity may
embarTass the banks.
IF TIE money that is being hidden and
boarded can be brought back to circula-
ton, the present stringency will dlsap-
pear at once. It does no good 20 supply
money from the Treasury il an equal or
a greater amount IS drawn ont by de-
pOsitors.
Postal Banks Not Sufficient.
The administration IS prepared. so We
are informed. 10 recommend a postal saw
ings bank. While this would doubtless en-
courage deposits. and while these deposits
could in turn be handed over TO the banks,
IL does not furnish complete relief. be-
cause the plan as presented limits depos-
its 20 $50 for one person for one year.
and does not contemplate the opening Of
checking accounts.
The business community therefore can
not use the postal savings banks to any
great extent, and besides it would take
some time TO inaugurate q postal savings
system and secure the necessary number
os employees 20 make the plan effective
throughout the country. 1 believe It IS
possible for the government 70 give i'm
mediate relief by an act Of Congress. pro-
viding for the guarantee by the govern
ment of all deposits in national banks,
the banks thus guaranteed TO agree TO
reimburse the government for any losses
incurred. and TO make this reimbursement
in proportion TO their deposits. The ad-
vantage Of this plan IS:
''First-That every depOsitor in such
guaranteed banks will feel secure.
'Second-The expense Of It viii be paid
by the banks which get the benefit Of il,
and this expense viii be small compared
with the benefit gained
'Third-It can be put into effect imme-
diately, and thus restore confidence, and
enable business 10 be resumed.
Ought TO Suif the Banks.
ct is probable that all OF the national
banks would be willing TO take advantage
Of this guarantee. because the additional
security given 70 their depOsitors would
be Of great advantage 20 the banks. Dur
ing forty years the average annual loss
to depositOrs has been small, less than
one-tenth Of l per cent on the deposits
so small that it would be an insignificant
tax upon the four or FIVE billion dollars
of deposits. The government would have
ample security in the capital and surplus
Of the banks which would voluntarily
Join in the plan.
"As each bank would become inter-
ested in the proper management of every
other guaranteed bank, It would be easier
TO secure the legislation necessary for
the correction Of such abuses as may ex-
ist and for the better management of the
banks-for instance. legislation preventing
overborrowing by directors and officials
of the bank. and legislation preventing
speculation by officials.
Acceptable to DepOsItOrs.
1T seems to me that the plan suggested
ought TO be acceptable to the depositors.
all of whom desire security, and 1t ought
to be acceptable TO the bankers, who viii
be well paid by the increased deposits
for the tax that may be collected from
them TO reimburse the government. and
do not see that any objection can be
made to the use of the government as
a guarantor when il is amply protected
from loss.
THE only objection that occurs to me
is that State banks might be less attrac-
tive 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 financial
stringency continues. and they are there
fore. 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 expense from the
State banks guaranteed.
The Bryan BIZ In Congress.
Il proposed when in Congress the rais-
ing of a guarantee fund for the protec-
ton Of Gepositors. but the bill was de-