Evening star. [volume] (Washington, D.C.) 1854-1972, 1908-10-01
Bankers Committee Strong
Against Proposal.
LAW WOULD BE INJUSTICE
Injurious to Banks and Their De
positors Alike.
SAFETY LIES ONLY IN ASSETS
Congress Urged to Provide Means for
Readily Increasing the
Supply Of Currency.

DENVER. Col, October 1.-The oues-
ton of guaranteeing bank deposits was
brought squarely before the annual con-
vention of the American Bankers Asso-
ciation today in a report Of the associa-
tons federal legislative committee which
takes a decided stand in opposition to
such action by either federal or state gov
ernments The report. in part is as fol-
lows:
your committee is opposed to the guar
Affecting of deposits by either state or
federal governments. or assumption of a
trusteeship by either of guarantee
fund. believing that 1t would be a func-
ton wholly outside Of any purpose for
which state or federal governments were
organized. and for the further fact that
the assuming OF trusteeship would he
misleading to the general public, as It is
not a guarantee by either state or federal
government and that such a law would
work to the detriment not only OF the
banks but to the depositing public as
we'll
Injustice to Solvent Banks.
eff one class of bank creditors Is to be
insured against the usual mischance Of
business why not all classes. and where
is the justice Of levying a depositor's
loss. for which he is not responsible, upon
other banks who also are not responsible
for his loss and who have no voice what
ever in the selection Of where he shall
keep his account?
''Depositors of bank are guaranteed
primarily by the character OF the assets
in which the depositOrs money Is in
vested. margined and fortified by the
banks capital and surplus. II a banks
assets-that, is' to say. its Investments
are good. II it's credits have been wisely
extended. depositors are amply protect
ed and need no other guarantee. Why
should not the banks assets be guar
anteed? Why not guarantee payment to
banks of the receivables of their va
rious clients? This would guarantee de-
posits. Both propositions alike are H.
logical and absurd.
deposits in q bank are safe in lust
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.
Would Bring on Panics.
we are told that these plans Will do
away with panics. Are they not more
likely to prove the mother Of panics? A
panic is business paralysis. born OF un-
reasoning fear on the part of the public.
In such conditions will depositors refrain
from withdra wing 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 2O.CO0 banks? To those who
have had the grueling experience Of sew
eral panics there is but one answer to
this question, and no iaW could be spread
on the statute books more fraught with
mischief than a law for enforced guaran-
tee of bank deposits.
Let Congress provide means whereby
perfectly solvent banks with good assets
can obtain currency with the same faciI-
ity as banks in other great commercial
nations and they will. have gone far to-
ward prevention of panics."