Mexico weekly ledger., 1908-10-01
GUARANTEED BANKS.
By William Jennings Bryan, Topeka, Kansas, August
"a, 1908.

/ RhdAltaAly 0DpuSE4 IL. ne HAtBs
THE Democratic platform recommends
a tax upon national banks and upon
such state banks as may come in. in the
nature of enforced insurance TO raise a
guaranty fund to pay the depositors OF
any bank which falls"
And then he questions the right of the
government to enact such a law, saying
SHow state banks can be Included In
such a scheme under the constitution Is
left In the twilight zone Of state rights
meaning n purpose OF the promises Of
the platform. If they come IN under
such a system, they must necessarily be
brought Within the closest national con-
troll. and so they must really cease to be
state banks n become national banks"
His solicitude for the state bank will
hardly impress the country, for he is
quite indifferent to states int their re-
served rights when he deals with other
subjects. When Congress is in the con-
troll of those who want to legislate for
the whole people rather than for the few,
II Will not be difficult to frame a law
under which state banks can avail them
selves OF the advantages OF a federal
law guaranteeing the deposits Of ma
tional banks, just as II was easy in Ok
lahoma to frame a law which permitted
national banks to a k advantage OF the
state guaranty system. It will also be
easy to enact a federal law which will
permit national banks to avail them
selves OF state guaranty systems until a
! national system can be secured. Attor-
ney-General Bonaparte's ruling, whether
1t correctly l%nterprets the law or not.
would not bring such CONSERVATION as II
does II the Republican candidate favored
a law allowing national banks to take
advantage Of state systems for the pro-
lection OF deposltors, but Mr.. Taft's hos
tiltty to all guaranty systems Is shown
in the objection which he offers:
The proposition is 10 tax the honest
and prudent banker TO make up for the
No one can forsee the burden which,
under this system, would be imposed
upo the sound and conservative bankers
OF the country by this obligation to make
good the losses caused by tho reckless.
speculative and dishonest men, who
would be enabled to secure deposits
under such n system on the faith OF the
proposed Insurance: as In its present
shape, the proposal would remove all
safeguards against recklessness in bank
ing, and tho chief. and, in the end, prob
ably the only benefit would accrue 10 the
s~peculator. who would be delighted TO
enter the banking business when Il was
certain that he could enjoy any profit
that would accrue. while the risk would
nave TO be assumed by his honest and
Woodworking fellow"
He even pictures dire disaster and de-
clarea that ~ the proposal were adopted
exactly as the Democratic platform sug-
gests. 1t would bring the whole banking
system Of the country down In ruin"
As an afterthought, he suggests that
a voluntary system might be tolerated,
but as his objections 10 a compulsory
system apply Just as well to a voluntary
system we may fairly count him against
all legislation which has for It's object
the guaranty Of depositors.
AS Mr.. Tafts argument Is thai pre-
scented by the big banks which put their
own selfish interests above the welfare
OF the depositors and the safety Of the
community, II is worth while to answer
the several propositions which he adj
Let US take the first sentence. that
the honest and prudent banke would
be taxed to make up for the dishonesty
and ~imprudence Of others" Is not this
true Of all restrictions on banking?
Does not the honest and prudent banker,
under existing laws, suffer In order that
the deposition nay be protected from the
dishonest and imprudent? If we had no
banking laws at all. and banking ives
done by private individuals, the honest
and prudent banker would save the
money that he now pays for enforced
examinations Of his bank, and he could
at times make interest on a mart Of the
money which he Is now required to keen
In his vault as a rigid reserve. But be-
cause some bankers are not prudent.
these laws place a burden upon the good
as well as upon the bad, 1t being difficult
to distinguish the prudent banker from
fails. '
In like manne 1t might be said that II
al people were careful about fire, fire
insurance rates need not be as high az
tney are, but the careful have To nav
higher rates than they should because
some are not careful. Life insurance
rates are higher than would be neces-
AIRY 70 cover the actual risk If every
BODY took care OF his health, and here.
100, the cautious are burdened because
some are careless Of their health, All
insurance Is open to the same objection,
ma vel InaNTr1 n ~ eli S.
Ing, and the Insurance Of depositors e.
growing in popularity more rapidly mar
any other form OF nsurance-and 7 mav
sad, it Yields the largest return on the
Mr.. Taft complains that mo one con
1oresee the burden which, under iris
system, would be imposed unon tbe
SOUND and conservative bankers Of the
eountry by this obligation to make good
tne losses caused by the reckless' aneer-
lativc and dishonest men," etc. We have |
the past TO guide us, and we have REQ.
son 70 believe that the loss will be less
when banks become mutuaIIv rsSnanst
PIE 1or zach others deposits thew will
De sufficiently Interested in each othar
. iavar better regulations and greater
What has Mr.. Taft done to nrotect do
positors from recklessness and snecris-
tlonf Whfle he refuses to protect denca
isors' he praises the Aldrich- vreeland
"'h~h hhfite speculation and af0ck
loDplhg,, IN declaring that the system
proposeu by the Democrats would re.
move az safeguards against reckiesEness
~ nahking, Mr.. Taft betrays an he.
nofanee OF the subject, for the plan does
mua oppose the removal Of n safe-
sua.us. IN tact, 1t contempiates stricter
Lsgulatons OF the banks. and Okiahoma
nas aifeaay made the banking reglla-
He declares that "the op,v hsn.o.
would accrue to the snecula{o. aen
Mouid oe delighted to enter the bankfno
business when 1t was certain that he
c0uid enloy any profit that would accrns
mhLs we rlsk would have to be assured
w nus honest and Woodworking fellows
The present banking law renniras RVS.
Gertalh amount OF capital shall be Invested
IN 'ns business, and that law woIId
sun stand. To enter the banning h,n
ness. therefore, a man would slther pusl-
TO nave the capital himself or aec,,ra
confidence of men who had tbe sne
And this capital, together WITH thpp1aL
per cent liability, would be a .ne ~
mat the stockholders Womb net dLhahty
tionaliy select careless Officials W.
would a Spectator" be sdaii1h.. why
enter the banking business" under l
guaranty system? He IL MOI tne
from peeuniary obligation, NOR e. h H.
heved from criminal liability, M W u 81,
ave nothing to gain by eareiesVu
nor would the Stockholders have es
thing 70, gain by indifference. any
Jhe chief cause Of bank failures
making OF excessive loans to directors az