The star and Newark advertiser. [volume] (Newark, N.J.) 1908-1909, 1908-10-01
OPPOSE
BANK DEPOSIT
GUARANTY PLAN
Committee Reports Unfavorably
on Latest Financial Idea and
General Discussion Follows.
GEORGE M. REYNOLDS WILL
BE ELECTED PRESIDENT
Currency Commission Will Out
line Workings of Financial
Reform Movement.

0i1A LII, Soi't wv. - 4oNStACh
of guaranteeing deposits was brought
squarely before the annual convention
of the American Bankers Association
today in a report of the associations
Federal legislative committee, which
takes a decided stand in opposition to
governments. The report in part Is as
follows:
Your committee is opposed to the
guaranteeing of deposits by either
State or Federal governments, or as
sumption of a trusteeship by either, OF
a guarantee fund, believing that 1t
would be a function wholly outside Of
any purpose for which State or Federal
governments were organized, ana for
the further act that the assuming of
a trusteeship would be misleading to
the general public, as it is not a guar
antee by either State or Federal gov
eminent, and hat such a law would
work to the detriment, not only Of the
banks, but to the depositing public as
we'll"
IF one class of bank creditors is to
be insured against the usual mischance
of business, why rot all classes, and
where is the Justice Of levying a de-
positor's loss, for which he Is not re-
sponsible, upon other banks who also
are not responsible for his loss and who
have no VOICE whatever In the selec-
ton of where he shall keep his account?
"Depositors of a bank are guaranteed
primarily by the character of the as
sets IN whichNthe depositors' money is
invested, margined and fortified by the
banks capital nj surplus. If a banks
assets. that is to say Its investments,
are good. II its credits have been wise
~ extended, depositors are amply pro-
tected and need no other guarantee.
Why should not the banks assets be
guaranteed? Why not guarantee pay
ment to banks Of the receivables Of
their various clients? This would guar
antee deposits. Both propositions are
alike illogical and absurd.
deposits in q bank are safe in just
the proportion that it's assets are good.
We should discourage unwise extension
of credit, rather than open the way for
reckless banking, which would seem to
be the inevitable result of the proposed
schemes.
I'VE are told thai these plans will do
away with panics. Are they not more
likely to prove the mother of pan,cs,
A panic Is business paralysis, born Of
unreasoning e on the part OF the
public. in such conditions will de-
positors refrain from withdrawing their
funds? Will they not, rather, withdraw
them at once because of the unknown
danger resulting from each bank being
compelled to guarantee the losses in
20, 900 banks? To those who have had
the gruelling experience of several
panics, there is but one answer to this
question, and no law could be spread
mischief than a law for enforced guar
lntee of bank deposits.
Let Congress provide a 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 panics.'
The resolution was then opened for
discussion.
George M. Reynolds, present vice.
president. is scheduled for president,
and Lewis E. Pierson. chairman of the
executive council, will be elected vice
president. The executive committee
will undoubtedly reflect the secretary
and assistant secretary, but the choice
of treasurer is still in doubt.
: The report Of the currency commits
sion will outline what has beer lone
during the past year towards securing
a national currency law.
Three addresses are on today's pro-
gram, Alexander Gilbert, president of
the New York Clearing House. speak
ing on Vital Issues" Joseph f. Rams
dell, president of the National Rivers
and Harbors Congress, on "Conserva-
ton of Natural Resources and Fastus
j.. Wade, president of the Mercantile
Trust Company of st. Louis, on Guar
antee of Bank Deposits"
DR.. Woodrow Wilson. president of
Princeton University, Princeton, N. j.,
in an address yesterday afternoon adj
vocated the establishment of small
branch banks throughout the country
in order to give the farmers ready ac-
cess to cash. The speaker declared
that such a move would change the
attitude OF plain men toward banking
throughout the United States.
The convention today voted to meet
next year in Chicago.