Daily Kennebec journal., 1908-10-02
Bankers Oppose to Guar
anteeing Of Deposits.
Would Be Unjust and Would
Cause Panics, They Maintain.
Are Also Opposed to Federal Pos.
tai Savings Banks.

Denver, Oct. 1.-The question Of
guaranteeing bank deposits was
brought squarcly before the annual
convention of the American Bankers
Association today, in report Of the
associations federal legislative COM
mittee, which takes a decided stand in
opposition to such action. The report
in part is as follows:
Your committee is opposed to the
guaranteeing of deposits by either state
or federal governments, or assumption
of a truSteeShip by either of a guardn-
tee fund, believing that it would ,e
function wholly outside of any pur-
poses for which state or federal GOV
ernments We're organized. and for the
further fact that the assuming Of
trusteeship would be misleading 10 the
general public as it is not a guarantee
ny either state or federal government;
and that such Il law would work tC the
dcterment, not only of the banks but
to the depcsitins public as well.
"Depositors of a bank are guaran-
tced primarily by the character IF the
assets in which the depositors' money
is invested, margined and fortified by
the banks capital and surplus.
If banks assets. that is to say. its
investments are good, if its credits
have been wisely extended, depositors
are amply protected ana need no other
guarantee.
I'VE are told that these plans will do
away with panics. Are they not more
likely to prove the mother of panlcs'
panic is business paralysis. born of
unreasoning fear on the part of the
public. In such conditions will deposl-
tors refrain from withdrawing their
funds? Will not they rather, Withdraw
them at once, because of the unknown
danger resulting from each bank pc'ils
compelled to guarantee the lcsscS IN
10000 banks? To those who have had
such experience of several panicS. there
is but one answer to this question ana
no law could be spread on the statute
looks more fraught with mischief than
q law for enforcing guarantee OF bahk
deposits.
let Congress provide means
whereby perfectly solvent banks with
good assets can obtain currency with
the same facility as banks in other
great commercial nations and they
will have gone far toward prevention
Of ranicS.
The committee submitted the follow
ing resolution:
Resolved that the American Bank
ers' Association is unalteraby oppos-
ed to any arbitrary plan looking to the
mutual guaranty of deposits either by
a state or the nation for the following
reasons:
"1-It is a function outside of state
or national government.
"2-It is unsound in principle.
"SS-It is racticable and mislead-
ing.
"4-It is revolutionary in character
ct is subversive to sound econom-
les.
'6--It will lower the standard of our
present banking system
"1-PrOductive of any encouraged
bad banking.
"S-It unjustly weakens the strong
and unfairly strengthens the weak
banks.
CIT discredits honesty, ability and
conservatism.
"10-A loss suffered by one bank jeop-
ardiZes all banks.
"11-The public must eventually pay
the tax.
"12-It will cause and not avert pam
les"
The federal legislative committe re-
ported adversely on the proposed es-
tablishment of postal savings banks
saying:
''No bill has been presented which
would really prove beneficial to the
country"
Among the latest horticultural pro-