Northern Wisconsin advertiser. [volume] (Wabeno, Wis.) 1898-1925, 1908-10-22
VIEWS OF AN EXPERT.
Shall Banks Be Made Liable Tor
One Anothcr's Debts?
Recognized Authority on Financial
Questions Discusses Practical
Bearings Of Proposed Guar
antee Plan.
(By George f. Roberts, former Di-
rector of the Mint)

Wy OCOtSc houtItS, lOilhSi Ii
rector of the Mint.)
The proposal to require the banks Of
the country to guarantee each others
deposits owes its present strength to
the financial disturbance of last fall.
1t is urged as means of preventing
panics, and there Is no disagreement
about the desirability OF accomplish
ing that purpose. Most Of us agree
that repetition Of the conditions
which existed last fall should be made
impossible, but this is by no means the
only way to do it, or the best way.
For years the advocates of compre-
hensive currency reform have pointed
out that with $14,O0O,OOO,O of bank
deposits in the country and only about
$3,000,000,000 of money all told in the
country, both in the banks and out,
there should be some method provided
by which, on the basis of good assets,
the supply of lawful currency could be
readily increased tn meet exceptional
demands, whether such demands were
due to seasons of unusual business nc
tivity or to alarm among depositors.
Their foresight and arguments did not
avail, but they are hardly to be swept
IF their feet now by impatient zeal for
this new, and as they regard it, i'll
considered scheme They stand for a
,omplete and scientific trea tment of
the subject.
The guaranty of deposits is crudr
md imperfect remedy at best. 1t does
not recognize or attempt to cure tn
defects in our banking and currency
systems, but aims only at persuadina
depositors net to draw their deposits
rhe losses to 'epositors by the failur
If national IS has become an insig
nificant per re. and is growing les
every year. result of natural, eve
lutionary rf9~ress in banking. TIL
standards being constantly raised
and the ei Of official inspectiol
and super 4 constantly improved
The true development is not by
any revol, rv policy, but by hold
ing in1 bankers to
stricter a'1 at the same tin
enablin~ nroperly conduct
bank in a supply of cu
rency to amands upon it.
The weakness in OF
eurrel the fact that ii
not r. We to the needs
The legitimate demal
for rom year to yea
and fl season in the sam
wear. Jar fact that there
is a lore business to be
handle1 mber LIST to Deem
Der 31st than in any other
four M year, but there Is
no more the country unless
gold is r the purpose.
Would | E8ecISIess Banking.
AS rel measure the guaranty
of bank de not only inadequate
but it is W than inadequate, for II
proposes 10 erturn the principle OF
Individual responsibility by means OF
which the banking business has beer
raised to. its present high standards
and upon which all individual and so
cial progress is based.
The proposal contemplates that the
public shall be relieved entirely from
the exercise of judgment and dis
criminal ton ia the rhoice of banks, ant
while it is highly desirable that al
banks shall be made safe, to the enc
that even the most ignorant and con
fiding may be protected, 1t is still true
that an alert public opinion has great
influence in maintaining proper bank
ing standards. We cannot afford to dc
without that influence.
Under present conditions the invest.
ments, the personal habits, the general
character and abilities of the banker
are under the constant scrutiny of the
community, and a matter of public In
terest Notwithstanding occasional In
stances in which the public has been
deceived, it may be stated as a general
proposition that an unblemished char
acter and a reputation for good bust
ness ability and conservative judgment
have been necessary to success In the
banking business. The public looks
over the Individual who Is to receive,
and invest and be responsible for It's
money. with some discrimination, and
the elimination of the unfit by the
scrutiny and composite judgment OF the
community is a factor OF the highest
value in maintaining the standards Of
the banking business. 1t Is, however,
factor entirely overlooked by the adj
yocates of this scheme.
They calculate the Insignificant per-
centage of loss to total deposits under
present conditions. and assume that no
greater losses would occur after char
acter ceased to be factor In the bust
ness, and all deposits were given blind
ly to whoever would bid highest for
them. To the objection that this elm