Los Angeles herald., 1908-09-27
TAFT DECLARES
Ills VIEWS ON
POSTAL BANKS
DENIES GUARANTY PLAN Is
SOCIALISM
METHOD OF GREAT BENEFIT TO
WESTERN STATES
Would Perform Useful Function in
Case of Panics Because Entire
Credit of Government Is
Behind Them

H HINNEAPOLIS, Mimi. Sept. 26.-
WI The fourth day of William H.
A'A T&fts speaking campaign ended
here tonight with the delivery of his
views on the question of postal savings
banks and in opposition to Bryan's
theory regarding government guaran-
tee of bank deposits He said:
II wish to call your attention today
to a plank in the Republican platform
and to plank in the Democratic platr
form which involves important though
not controlling issues in this cam
paign.
81 refer first to the plank in the Re
publican platform that recommends
the adoption of postal savings banks.
The Republican convention doubtless
had in mind the bill which had been
introduced in the senate and reported
by the senate committee for passage
authorizing and directing the postmas-
ter general to receive savings deposits
at every money order office and at
such other offices as he may designate
in sums of 81 or more and multfples OF
10 cents after the first dollar"
After narrating the provisions OF the
bill Mr.. Taft said:
Objected to as Socialism
.The objection has been made that
this is paternalism and Socialism anu
Is introducing the government into the
banking business. The objection Is
without weight. When it is considered
that only eleven out of thirty-nve
states have savings bank facllities,
when 1t is known that In the mloaie
west east of the Rocky mountains the
average distance from any postonce 10
a bank of any kind Is thirty-three
miles and west of the rockies is hfty-
five miles, 1t can be readily understood
that the private enterprises do not
supply the need of savings panks,
which in order to furnish a motive for
thrift and savings must be OF easy
access to the class whose welfare II Is
sought thereby to improve. OF the
S3. .5,O0. .OoO 900 deposits in savings banks,
AZ per cent Is in New England, 80 per
cent in New York, q per cent insFenn-
sylvania, Ohio, Illinois, Iowa ana Cali
fornia, leaving but s per cent OF the
total In other states.
Postal Bank Useful
"The postal savings banks would per
form, most useful function in case
of panics. because they are govern
ment institutions with the whole credit
of the government behind them, and
would attract the deposits or tnose
small depositors whose runs in panic
times upon the banks produce such
disastrous consequences. The deposit
OF this money in government onices
and the power of the government
which redeposits that money in the
national banks in the neighborhood
would furnish a means of meeting an
exigency that no other system pro-
posed has thus far offered.
"The Democratic platform pledges
the party to the support of a system
by which all the national banks of the
country are required to guarantee the
deposjts to the depositor in every bank,
and this guaranty is to be performed
nv tax upon each bank in proper
tion TO its deposits, the proceeds of the
tax to constitute fund from which
the depositors of any falling bank are
to be paid, and if the amount OF the
tax is not sufficient to raise the Iunu
required, the tax to be raised by subse-
ouent assessment on all the banks OF
the country and state banks are to be
allowed to come in and get the benent
of the same guaranty, under conultlonS
to be imposed by law.
mo one can dispute the Importance
of making the deposits in every nation
al bank as secure as possible, PROVIDED
the remedy adopted Is not itself worse
than the evil to be cured; me sov-
ernment has imposed certain limita-
tions upon national banks which have
already tended to reduce the losses to
depositors.
sThe result has been to introduce
into national banks a class of men or
high character and great business ana
banking ability, and the losses in the
last forty years to depositors in ma
tional banks have been reduced to an
average annual loss of one-twenty-
sixth of 1 per cent of total deposits.
II the loss, even though small, could
be avoided, 1t would be of great BEN
eft and should be brought about, for
while the percentage is small the in
diyiduals upon whom the loss falls may
be heavy sufferers The question is
whether we are to bring about an avoi-
dance of this loss by the proposed
Democratic remedy, or in a more con-
servative and gradual way by perfect
ing the examination of banks by rigid
prosecution of all who violate the
banking laws.
"The remedy proposed by Mr.. Bryan
will make the conservative banks pay
for the negligence, carelessness, lack
of confidence or dishonesty of the fall
ing banker. 1t takes from one man
without fault on his part money to
pay for the default of another.
ITO say as Mr.. Bryan does, that the
POSTAL savings bank system is more So
cialistic than this is to give curious
definition to Socialism. Postal savings
banks take no mans money to make
up for the default of another. 1t mere
ly uses an arm of the government
which is not and cannot be discharged
by private enterprises. Whereas the
enforced guaranty plan takes out of
one mans plan engaged In business
of banking money to pay for another
mans default. This is pure Socialism.
As Practical Question
Now let us pass the Socialistic and
inequitable feature of this system and
come to the question whether it will
really help matters. 1t is permissible
under the national banking act for
banks to organize with capital of
$4,000. The security which banks Of
fer the depositors depends upon the
amount of capital, the amount of sur
pus. and pubic confidence in the officers
OF the institution.
under the proposed system the de-
positors in a bank with d capital of
$25 600 and no surplus, and with officers
OF little experience and Indifferent rep
utation, cannot offer the public exactly
the same security for the payment of