Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1908-02-01
THE BANKERS ILLOGICAL PLEA.

If poll could be taken of a thou
sand bankers in all probability the vote
would be almost unanimous in oppo-
sition to the insurance of bank deposits
all and solely because the banker feels
that insurance of bank deposits would
remove the reward of public conf
t7ence and patronage which an honest
. banker now receives for his careful
! ctonduct of his business. To him the
tear is dominant that there would be
no more inducement for the public to
deposit with him than with the reck-
less banker were the public's risk en-
tirely covered by insurance. Even Mr..
Forgan. president of the largest bank
In Chicago and one of the foremost
thinkers upon banking finance, is or
this same opinion and yet Mr.. Forgan
gives it as his opinion that he had
never yet seen a bank fail except thru
the error of loaning directly or indi-
srectly to it's own officers.
While this is the bankers view 1t
is also equally as probable that a poll
of public opinion would be fully as I'M
animous in favor of insurance of de-
posits. The public has been taught
that it is good public policy to make
the owners of banks assume the risks.
hence the kind of investments which
savings banks are permitted to make
are prescribed by law, the amount of
cash which all banks must keep on
hand is prescribed by law, the condi-
ton of every Incorporated bank is ex-
amined by government examiner,
and the investors in banks are re-
CURED by law to guarantee their de-
positors to the extent of an additional
sum equal to the amount they have
invested in the banking business.
All of these things have been enacted
into law by the public for its own pro-
lection in it's deposits. The bankers
now accept them as wise provisions.
But just so far as an adequate reserve
required by law protects the safety OF
deposits and just so far as the double
liability of stockholders protects it the
his reward in public confidence and
business patronage for his careful
banking. All bankers are included in
the provisions of the law and none
have any advantage. If these meas
ures, which We're intended to make de-
positors absolutely safe, fulfilled their
purpose. there would be no need for
insurance of deposits but experience
| has shown that they fall short and
banks do fail without paying depos-
titors in full What then are we to
do? It is no defense for a banker to
say that he does not want depositors
10 have full protection because he
{could not gain business at the expense
iof a careless or dishonest banker. The
3p,1blic welfare demands that the or
iiginal purpose of all banking safe
guards be carried out We might re-
iuuire a treble liability Of stockholders
and then require every stakeholder in
#ia bank to put up in the hands of the
iigovernment adequate collateral to
Aguarantee the geruineness Of the. Ii
ability. This would probably do the
business but the principle of insurance
has proved so sound and the premium
tax so slight a burden when spread
over all the members of a given class
that It seems the most effective and
practicable and least expensive method
Of repairing the deficiency in our pres
ant banking safeguards.