Twice-a-week plain dealer. (Cresco, Howard County, Iowa) 1895-1913, 1908-03-06
COMMONER
COMMENTS
Mr.. BRYAN's OPEN LET
TER TO Mr.. FoRGAN.
sELFisHNEss OF LATTER's AReU.
MENTs POINTED OUT.


MENTS POINTED OUT.
Interests Of Bank Stockholders Placed
Above Interests Of Depositors-
How Government Guarantee
Law Would Work.
James B. Forgan, president of the
First National bank of Chicago, gave
to the newspapers an open letter ad-
dressed to Mr.. Bryan in which letter
Mr.. Forgan argued against the pro-
posed guarantee of bank deposits and
insisted that Mr.. Bryan. in a former
criticism of Mr.. Forgan's position, had
misquoted him. Mr.. Bryan understood
Mr.. Forgan to say that he was OPP
posed to the guarantee of deposits be-
cause 1t would make all banks SAFE"
whereas what Mr.. Forgan really said
was that it would make all banks
equally good" In an open letter adj
dressed to Mr.. Forgan Mr.. Bryan &C.
cepts the correction, adding that he
thinks the distinction drawn is very
fine.
Mr.. Bryan resumes:
you object to the governments
guarantee because 1T puts all banks
on an equality and makes all banks
equally good, and you object to it for
two reasons: First, because it would
deprive banks like your own of the
advantage which they have won by
Conservatism and good management
You intimate that it is not selfish for
you to defend yourself and your bank
against policy that would 'despoil'
you or 1t of vested rights and prop
erty.' and are willing to admit your
selfishness If that can be considered
selfish.
Let me make the charge so directly
that there can be no question about
what l mean. l charge that you put
the interests of your stockholders
above the interests of your depositors
and that you put the interests of the
big bank above the interests of the
various communities and of the pub
lie at large
Let me remind you that that which
you regard as good will is largely an
advantage created by law. The good
will which you measure in dollars and
cents is not entirely due to good man.
agement. 1t is due, in the first place,
to the fact that you are national
bank. and you are national bank
because the representatives of the peo-
pie enacted a law that permitted you
to organize as national bank 1t is
due in part to the fact that national
banks are inspected and regulated by
law, and these laws are made by the
representatives of the people. It is
due in part to the fact that many
people believe that deposits in nation
al banks are in some way guaranteed
by the government as the bank note
Ia,
when the laws were made, the law
makers thought they had provided for
the security of the depositors, and 1t
is not only unfair in you to count as
entirely personal to yourself or your
directors, the confidence shown by the
public In your bank, but it is selfish to
insist that the people have no right
to obtain further security, even If, as
q result of that, your bank loses some
of the advantages which it now has
over smaller banks The bank exists
for the benefit of the people. 1t is
mistake to assume that the people ex-
list for the benefit of the bank.
THE law requires that a certain
percentage of the deposits shall be
kept as reserve-why? For the ben
eft of depositors. The law provides
that no more than ten per cent. of the
capital and surplus shall be loaned
to- one person-why? For the protec-
ton of depositors. Every law passed
for the protection Of depositors tends
to equalize the banks, and you can
make just as sound an argument in
favor of the repeal of all restrictions
as you can make against the guaran-
tee of deposits. The fundamental
difficulty is that you look at the ques-
ton from the standpoint of the bank
er and not from the standpoint of
the depositor, and you insist that the
deposftor shall be left unsecured in
order that your bank may have an adj |
vantage over smaller banks.
What security do you give your de-
positors that other banks do not give
their depositors? Is it that the officers
of your bank are better men? They
may die, and inferior men take their |
places Is 1t because your directors |
are better than other directors? The
board of directors may change. Is It /
because your stockholders are better
than others? Your stock is sold on
the market and change may take
place any day in the ownership of |
the stock, that will entirely change L
the character of the bank; and If such
change takes place, who will know It,?
In the recent stringency, the banks
all over the country felt themselves
Justified In suspending payment upon
checks, and for the first time in our
history the depositor was told howl
much Of his own money he would be
allowed to draw out for the carrying
on Of his business. Why was this
extraordinary step necessary? Because
the banks throughout the country had
deposited part of their reserve in
New York and other reserve cities,
and could not withdraw them. Each
bank feared run if it permitted the
of deposits, and why
would depositors want to withdrawal
Because they were afraid Of losing
their deposits if they did not.
Il answer your first argument, there.