Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1908-06-12
BORROWING WITHOUT LIMIT.

The bankers in convention at Sioux
City have been greatly entertained by
strong arguments to prove the PROPOSE
ton that a banker should have an abb
solute guarantee in the way Of en-
dorsers and collateral for every dol
lar he deposits with the business pub
lie in the loans he makes, but should
not be required even to provide for IN
surance to guarantee the millions
which the public loans to him In the
way of deposits. The argument Is
something like this; banker acts
merely as trustee for other peoples
money. He receives deposits and prom
ises to pay them back on demand. This
makes him borrower from the pub
lie and he is fully entitled to the con-
fidence of the public because banks
that enjoy from three quarters to q
million deposits generally have Sl00,-i
600 capital and the stockholders, II
abel to pay, are good for 100000 more
in case Of disaster. On the other hana
the big merchant, wholesaler or man
ufacturer who can list anywhere from
500, 900 to 100000 in bona fide assets
is not entitled to borrow more than
ten per cent of the banks capital and
surplus and the farmer with $4,000 OF
land is usually asked to get his broth,
er to sign with him when he borrows
$500 on his cattle.
This business of being trustee for
other peoples money is grave respon-
sibility. The government has recog-
nized 1t and employs examiners 70
travel about and spy upon the trus-
tees. AS precautionary measures the
law REQUIRES from 15 to % per cent
OF the money borrowed from the public
to be kept on hand or In other banks In
cash, and as a guarantee of the trus-
tees honesty and competency the
stockholders are required to invest
from $25, 900 upwards in national banks
and endorse the bankers liability to
his depositors for an additional sum
Of an equal amount. This much of a
guarantee of deposits Is considered
wise and scientific by all bankers. But
the federal government itself does not
have SO much faith in the system for
when it has money to deposit in ma
tional banks 1t asks the bank to put up
collateral in bonds to secure the loan.
The banker accepts this provision
without protest.
But now at the convention bankers
will gather and agree among them
selves that the general public, the
widow, the orphan, the farmer, the
wage worker, the struggling business
man and the aged couple are entirely
safe In loaning without collateral Sc
curity million dollars to any one bank
that is worth from $4,000 to $4,000
of invested capital. OF course, no such
bank would loan more than $4,000 to
$4,000 to any one business man or
corporation even were he worth more
than 100000, but it is entirely safe and
proper for the public to loan million
to q. bank of that worth without a
guarantee and the funny part of 1T all
is that the banker can quote statistics
Of bank failures to prove that only
very small per cent Of the money
thus loaned to banks is ever lost. About
tenth of one per cent is the ex-
perience, and yet the banker thinks
that the public is not entitled to col
lateral security to the amount of tax
Of one-tenth of one per cent upon de-
posits. This business of being trus-
tee for other peoples money is entitled
to it's privileges as well as it's respon-
sibilities.