Los Angeles herald. [microfilm reel] (Los Angeles [Calif.]) 1900-1911, 1908-08-28
BANKING LAWS DISCUSSED
BY DEMOCRATIC CANDIDATES

turbs the business of the city or town
in which the bank is located.
The law should make 1t a criminal
offense to loan more than the prescribed
amount to one person, and we would
probably be able to secure the passage
of a law prohibiting market speculation
by bank officials.
The Oklahoma plan is better. A bank
recently failed in Oklahoma; within
forty-eight minutes after the notice OF
suspension the officer in charge had
authority to pay all depositors, and
then the banking board proceeded to
collect the assets of the bank and to
prosecute hte officials criminally. When
the business was closed up the stock
holders passed a resolution thanking
the state board for its prompt action,
the action of the board being protee-
ton to the stockholders as well as to
the depositors and to the public gener-
ally.
TO justify law guaranteeing depos-
itors it is not necessary to show that
the advantage to the bankers would
amount to more than the tax. The exr
animation of the banks would continue
to be made at the expense of the banks,
even IL it were certain that the exam
nation was of no pecuniary advantage
to the banks. The law would continue
to require a certain amount of reserve
to be kept on hand. even If 1t We're Ger
tain that such law brought no pecuni-
airy gain to the bank; and so the banks
ought to be compelled to insure their
depositors against loss, even II II
could not be shown that such insur-
ance would bring a compensating adj
vantage to the bank. The bank char
ter has value; If it were not valua-
Bile the bank would not be organized.
The bank charter Is gift from the
people through the law, and the people
who authorize the establishment of
bank have a right to demand, in re-
turn, that the bank shall keep the
pledge which it gives when 1t invites
deposits, and make good its promises
of security to those who deal with 1t.
Banks Will Profit
But as q matter of fact, the banks
will, as a rule, gain more from the law
than they will lose by the tax imposed
by the law. The experience of the Ok
lahoma banks shows this. The interest
collected upon the increased deposits
will far more than pay the losses occa-
stoned by insolvency. But two banks
have failed and the assets have in both
cases been sufficient to reimburse the
fund.
The Republican party proposes the
establishment of a postal savings bank
system; the Democratic party prefers
the guaranteed bank because 1t is bet
ter for the depositor and better for the
banker-it gives the depositor the Sc
curity which he needs and yet leaves
the banking business in the hands Of
the banks. But the Democratic plat
form declares for "a postal savings
bank If the guaranteed bank cannot
be secured" and in November more
than 80 per cent of the voters will by
their ballots demand either the guar
atneed bank or the postal savings
bank. Can the financiers prevent the
carrying out of this demand?
There are only 10000 banks, while
there are 15,0O0.00O depositors, and I
do not hesitate to declare that in
conflict between the two the depositors
have q prior claim to consideration.
If we estimate the average number of
stockholders of each bank at seventy
five-and that is a liberal estimate
the total number of stockholders would
only be a million and a half, or one
tenth as many as there are depositors.
The stockholder is not compelled to
buy stock, while the depositor is COM
PEELED to use the banks, both for his
own sake and for the sake of the COM
munity, for only by using the banks
can he keep his money a part of the
circulating medium. The guaranty law,
therefore, brings the greatest good to
the greatest number, as well as to
those who have the greater equity
upon their side.
There is another reason why the
claim of the depositor is superior to
the claim of the stakeholder. The
stakeholder has a voice in the selec-
fion of the bank officials; the depositor
has not. If anyone must lose, there
fore, as the result of bad management,
it ought to be the stockholder rather
than the depositor. And, 1 venture to
ask, if the bankers will not trust each
other why should they expect the de-
positors to trust the banks?
Mr.. Bryan left at midnight for Lin
coin, where he is expected to arrive
tomorrow forenoon.