Daily Arizona silver belt., 1908-10-09
THE DEPOSIT GUARANTEE IDEA

THE DEPOSlT tUAhANI6h AbhA
The strong opposition to the bank de-
post guarantee idea developed among
the members of the American Bankers
Association is likely to give the guaran-
tee project more prominence than ever
in the presidential campaign. Mr.. Bry-
an will undoubtedly make use of it to
strengthen his plea that the banking in
terests, especially the big banks, are
opposed to scheme intended to benefit
depositors at the expense Of banking
profits; while Mr.. Taft will feel that his
opposition to guarantee idea has the
approval Of an important and influential
section of the community.
In the discussion of the subject at
Denver, various weighty objections to
the guarantee project have been brought
forward, notably by Prof. j. Laurence
Laughlin, of the University of Chicago.
Some of Prof. Laughlin s structures are
borne out, apparently by the operation
of the Oklahoma law, if reports from
that state, tending to show the initiation
of an era of wildcat banking may be
trusted. Applications for new bank
charters became so numerous that the
state banking commission sought to lin
it the number issued, only to find its
refusal to grant charter overruled by
the courts. In a letter from a resident
of Oklahoma quoted by Mr.. Taft in
recent speech this account is given
of the Oklahoma banking situation:
Conditions in Oklahoma are
growing worse than was expected,
on account Of the recent decision
there whereby it was decided that
the bank commissioner has no right
to refuse to grant a charter to par
ties proposing to organize bank.
AS an instance, in a town OF less
than 500 people as many as four
banks have been organized. Appli-
cation Is now in for the organiza-
ton of a fourth bank in one town
of only 40 population. Men whose
past record proved them to be in
competent are engaging in the bank
! ing business and getting in control
of banking institutions.
It would be unfair, of course, to re
gard the defects of the Oklahoma law al
a conclusive demonstration Of the fatu
ity of the guarantee scheme, for tina
law is confessedly experimental, and i
was doubtless passed without careful
and extended consideration. Much crit
icism of the guarantee idea is directet
toward particular details Of its admin
istration, or against some particula
method of guarantee, and might not III
against some other method of guaran
tee, and might not lie against some othe
method of administrative detail. Fo
xeample, Chairman Fowler, of tn
House Committee on Banking and Cur
rency. has declared himself totally or
posed to the Bryan plan Of guaranteein
bank deposits, while he is still strongl
in favor of his own plan, which con
templates the reinsurance of bank de
posits and bank notes under the manage
ment of and by the banks themselves
He is quoted as saying:
1.-THE unifcation Of our banking
system and the consequent coinsur-
ance of bank notes and bank depos-
its, which differ In no respect in
principle, must inevitably follow
thorough understanding Of the sub
iect, which will only come about
after full discussion following
submission of the question to the
people, precisely as the gold stan
dard was settled
This seems to us the sensible view t
take of the whole subject Of currenc
reform and its subsidiary question o
the guarantee of bank deposits. Tn
problems involved have yet to be thresi
ed on and settled, and while the rest
buttons of the American Bankers A.
ISOLATION are not conclusive in the mat
ter, they form contribution to the TO,
nation of public opinion that will b
given due weight. Mr.. Fowler is di'
posed to belittle the Denver resolutions
since the same bankers condemned cred
it currency few years ago, and now ad
NIT they were in the wrong. He int
mates they are likely to have the sam
Experience with the guarantee deposi