The Washington times., 1908-07-29
Guaranteeing Bank Deposits.

Judge Taft is entitled to credit for
honesty and courage in what he says
about the proposal to establish under
Government auspices a scheme of guar
anteeing bank deposits. There is no
denying that this project, TO which the
Democratic party has cheerily and un-
thinkingly committed itself, is popular
in a large section Of the country, and
particularly in that section which is
recognized as the battle-ground of the
campaign.
But likewise it must be conceded
that the plan is fundamentally bad in
policy and in economics. 1t would be
ruinous unless accompanied by the es-
Enlistment of such rigid supervision
as would practically link all the guar
anteeing banks together into one com
mon system, and in effect create a new
Bank of the United States. There may
be good reasons why such bank
should be created. A fast-increasing
number of people believe it should. But
is is certain that the Democratic con-
vention would have rejected such a
proposal by well-nigh unanimous vote.
The Democratic party is additionally
the enemy of the central bank idea,
and OF Government participation in
banking.
1t is a curiously illogical manifesto
ton, this of the Democratic party com
uniting itself to a scheme which would
point surely and inevitably in the d.
rection Of a Government-controlied
banking system. Yet, short of that de-
velopment, mutual guarantee of de-
posits VI II Government management
must eliminate the element Of character
from the banking business. 1t would
enable the insured banker to take lib
critics with the depositors' money with
out losing the confidence of the de-
posting community. de would know
that the depositor, guaranteed by the
aggregated resources Of a great series Of
banks, need have no fears. In the end
short, Of course, of establishing such
supervision a. would lead to Govern
ment banking would be inevita-
bly, a collapse Of the whole plan which
might involve the country in a crash
of unexampIed proportions.
The proposal to coin the worlds silver
at the ratio of l6 to 1 was attractive
1t was advanced as a pauacea for fnan-
cial ills, just as is this guarantee plan
Dressed up in the sophistries Of Hirvey,
it appealed strongly, for time, t. a
community whose attention had been
peculiarly drawn to financial problems.
But when the people had time 70 think
it over and study its possibilities and
conjecture its consequences, they re-
jectcd it.
The ready acceptance of this scheme
illustrates the disposition of the Demo
cratic party too blithely. to commit it
self TO economic proposals which prom
Use well, but viii not stand the test.
1t : well to know something about the
workings Of such a revolutionary propo-
sition before taking it up Judge Taft,
perhaps at the risk of losing some votes.
has strongly stated the dangers OF the
course. Perhaps for his courage he
will receive the reward which was
melted to his party in 1896. In that
campaign the party boldly opposed a
popular but fsllaeious proposition in
economics, exposed the fallacy, con-
WINGED the country, and won. 1t de-
serves, at least, to lose no strength by
reason Of being right instead of wrong
on this present-day issue.