Little Falls herald. [volume] (Little Falls, Morrison County, Minn.) 1889-1950, 1908-09-25
49, ssssl
4 BANK DEPOSIT GUARANTY.

BANK DEPOSIT GUARANTY g
Washington Herald Z: Are not Mr..
Taft and his friends making an un-
necessary, possl bly, a serious, blunder
in 50 strongly opposing the proposal to
banks? There is nothing in the
scheme inherently obnoxious to re-.
publican principles in fact, it IS quite
in accord with the republican policy
OF strengthening and increasing the
efficiency of the national banking
system. On the other hand, was
pointed out the other day, 1t makes a
departure from the old fashioned dem
ocratic opposition to national banks.
Normally, we might expect the re-
publican party. to accept a project to
extend the usefulness and increase the
safety of q banking system to which it
has always pointed with PRIDE y
But as the proposition has been
brought forward by the other side, it
is seized upon as another of Mr..
Bryan's wild and impracticable'
ideas, that must be fought at any
cost as visionary, dangerous and
socialistic.
On the merits Of the proposal,
financial authorities differ, as they do
upon nearly every other phase Of the
banking question. However, some
very respectable students of finance see
nothing impossible or dangerous in
the guarantee of deposits It will be
remembered that Mr.. Fowler, chair
MOI, IF tho Ho~so oo,,, ~, ~, hor b.
ing and currency, incorporated in his
bill for the reform of the national
currency scheme for the guarantee of
national bank deposits that was in no
way impracticable or visionary. Mr..
Fowler is not dreamer or socialist,
but one Of the ablest and best-informed
students of finance in public life. If
Mr.. Taft were looking about for a
secretary of the treasury really COM
petent to fill that Office he could find
no better than Mr.. Fowler; yet the
New Jersey statesman saw nothing
perilous or impossible in the guarantee
of bank deposits. His theory was that
all banking credits, whether note
issues or deposits, should be placed on
an equal plane Of safety-a theory that
sounds like common sense, as well as
sound banking. His bill embodied
a we'll conceived plan Of currency re-
form, though somewhat in advance of
congressional as we'll as of public
sentiment, and was strongly sup
ported, deposit guarantee and all, in
quarters wholly free from any
suspicion of faint and so-called
Organism, visionary or otherwise.
G 4.
same objections to the Bryan deposit
guarantee scheme as were brought
forward by opponents of Mr.. Fowler 8
measure. Mr.. Meyer fears that the
banks would be obliged to pay un-
known losses and to take unknown
risks under guarantee system. The
losses to national bank depositors,
however, are accurately known for
long series of years, and the risk can
be closely computed. It amounts to
but a minute fraction of the total
volume Of depos1ts-a fraction so
small, in truth, that it's littleness has
been urged as an excellent reason for
not guaranteeing deposits at all, it
being argued that the guarantee is
IN view OF the inconsider-
able total loss to depositors from
national bank failures. Mr.. Meyer
further objects that honest banks
would have to pay the debts of dis
honestly managed banks. That would
undoubtedly occur; yet 1T may be
plausibly argued that the entire bank
ing community ought to bear the
losses due to dishonest banking
rather than the Individual depositors
were the rule we may be sure
that the national banks, co operatively
organized as they would be under a
guarantee deposit system, would see to
it that dishonest banking was reduced
to minimum. It is by no means in
frequent in the banking world that
honestly managed banks come to the
rescue of one that has been badly or
dishonesty managed, in order to
prevent losses to depositors by the
failure Of the bank. The guarantee of
deposits would insure the safety of all
deposist as the rule, rather than the
PeVenu ana by to sasn
perfection. Instead OF placing a
premium on dishonesty, the guarantee
of deposits, by making it to the
interest of the banks to discountenance
risky and INSCRIPTIONS banking
operations, would tend to promote
honest banking.
Of course if guaranteeing deposits
is socialism, as our sapient postmaster
general would have US believe, let
drop 1t at once. What we do see,
however, IS that the republican
campalgners have picked up live
wire in this deposit guarantee
proposal. Why they should have
might better have left it alone, needs
some more lucid and convincing ex-
PLANTATION than Mr.. Meyer has been
able to contrive.