Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1908-10-30
GUARANTY HAZARD TOOCREAT
No Sane Insurance Underwater
Would Accept the Risk.
PLAN PROPOSED MANY TIMES
Men In Business often Asked, but
Turn Down Proposition Demo-
Gratis wouId Have the
Nation Undertake.

Nllt VI bdilh utpbslAS 6
plated in the democratic platform is an
attempt at the impossible. It's practical
application annihilates the incentive to use
honor. morals. character. ssgacity, judg-
n ent and acumen in banking.
THE rascal and the thief behind a bank
counter have everything to gain and Moth
ing to lose" says Mr.. Armstrong. THE
honest banker of character, who has
buided through a lifetime, carefully, a
banking house with a reputation for all
those elements which give a deposltor
sense of security, even though he is backed
up by large capital and constantly aug
mented surplus, is forced by the state to
the same level as the thievng, scheming
financial adventurer.
Both have the government back Of them.
One car use this as much as the other. Il
| is business partnership in which a state
compels bankers Of character and RESPONSE
bility to pay the bills for irresponsible. in
competent and immoral apprentices in the
! banking business.
mo game Insurance underwater. II he
were backed by unlimited capital. would
| ever assume such a hazard. There is,
Ioughy speaking. three billions Of cash in
the banks of the country. On that founda-
tion is placed ten billions more OF credit
/
that some ore, be It the government or
some one else is willing to guarantee every
depcsitor that not only his share Of the
/ three billions of cash will be inviolate, but
that the corresponding portion of the ten
! billions of credit will be as solid as the
rock of Gibraltar, and convertible into cas-
on the slightest notice.
No Insurance on Morals.
! hprphal1xy
in the insurance business have been asked
to do the same thing that the democratic
party now desires !he government to under
take. On each occasion the project was
backed by abundant capital, but the propo-
sition was invariably rejected. Some OF the
reasons for decliLing the proposition follow:
| First, because of the impossibility of
insuring the morals of everyone in the
bank, from the president to the office boy.
once 1t was known that the responsibility
was shifted to other shoulders latent quail
tiles OF greed, dishonesty and speculation
would appear in many, II not all, of those
connected with the banks.
Second because OF the lowered moral
tone fear of further Generalization in the
to-the-second methods necessary to a
successful bank.
Third, Because OF the impossibility of
insuring that the officials know how to
and would say No when doubtful or
speculative Schemes rIere. gubmlttsd.
Fourth, because the impossibility of
insuring that the committee OF the board
of directors would give the necessary at
tention to the loans and investments.
Fifth, because OF the impossibility of in
suring that the directors could get from
the officers information necessary to COM
petent supervision.
sixth, because Of the impossibiity "a
insure that the men who would make the
loans would show common sense. sagacity
and judgment, and would have the courage
and sense to act at the critical time IA
protect and not destroy She banks equity
in times of disaster.
such Guaranty Unsafe.
mo reputable bank needs a guaranty on
the above points No government or pri-
vate fund can safely give such guaranty
TO the other kind OF banks. Goodly fear
Of his depositors keeps many a banker
straight. The healthy respect in which the
man with the passbook is held is safer
than government or insurance guaranty.
Take away from the bank official-the
teller, the runner and the clerk-the fear
of the vengeance of the depositor and the
guaranty fund will be working overtime
Guarantee all banks shift the responsibility
for failure, and worse, to the government
make sure that the depositor will never
suffer the loss of a cent and you destroy
forever that outraged public opinion which
alone makes possible the successful prose
cution Of dishonest and incompetent bank
ers.
I Shift from the individual the RESPONSE
bllity he now has to his depositor for the
safeguarding Of his money and you at once
destroy his fear OF that depositor. With
out responsibility and without fear every
man in the bank is susceptible to the fever
of speculation, the pneumonia of greed ano
the consumption of dishonesty.
ASK any prosecuting official and he will
tell you that the absence of an active public
opinion makes 1t almost, il not quite, i'm
possible TO punish banking crimes. He Will
, tell you that It requires the active venge
ance Of the depositoIs themselves to ge
the necessary evidence and sympathy Of
the community TO result in punishment
sufficient to III the crime.
, I'm Just the same ratio the banker, wheT
! he is held individually responsible, fear'
and respects this force. Take it away and
you take off the lid. Transfer 1t to th'
government and you lower the honest. con
servative banker TO the level Of any finaD
cial adventurer who can break into thu
banking business by the front door.
Responsible Man Suffers.
THE last named cannot pay his share o
the guaranty, and inevitably the decent
responsible banker has to pay for the IN
: creased losses and peculations which mus
result when the irresponsible banker is pro
, tected by a government guaranty-a guar
anty which gives him safe haven from
the wrath of his depositors.
Impossible and unscientific from an in
sursnce standpoint as is the guaranty o
deposits OF a bank, as an institution. tn,
insurance of the deposit OF an individua
is not only possible but proper There Il
this difference, however;
I'm the plan OF government guaranty tn,
, whole responsibility OF the institution 4
assumed, and every man, woman and chilli
connected with the bank knows that tn,
responsibility is no longer theirs but tn,
! governments In the other, no one bu
! the insurance company and the deposit /,
knows that the latter has taken an extr,
: precaution. It Is simply a property insur
ance.
III the depositor had used the money I,