The Denison review. [volume] (Denison, Iowa) 1867-current, 1908-10-14
GUARANTEE OF DEPOSITS
Bryan's Scheme Does Not Meet De-
mands.
Inherent Weakness of the Demo
cratic Plan Pointed Out.
(From Gov Hughes Youngstown
Speech)

1.-The plan proposed by the Demo-
catic platform to provide for a guar
antee of bank deposits is open to seri-
Gus objection. Mr.. Taft promptly
pointed out its weakness. and Mr.
Bryan, despite his skill, has been UNI
able effectively to answer his criticisms.
The plan proposes to make the honest
and prudent banks meet losses for
which they are in no way responsible.
Mr.. Bryan replies that all banking re-
strictionS operate to curtai the free
dom of the prudent because of the
dangers arising from the abuses Of
others. But it is one thing to put a
business under needed restrictions OPP
Grating impartially and quite another
to compel banks to make good specific
losses not attributable in any way to
their neglect or default
If this plan is a good one for the
banks. why should it not be applied to
insurance companies? They are
to its close supervision. Life insur-
ance, for example, is one of the cs-
sential safeguards of the home, and the
interests of the policyholders cannot be
too surely protected. But what would
be thought of Il proposition to compel
| the well managed and conservative life
insurance company to make good the
losses whichwould be sustained by those
insured in other companies that be.
come insOlvent? This would largely
deprive the former OF the just benefit
of it's own conservatism and well earn
ed reputation and make easy the efforts
of the INSCRIPTIONS.
The business of banking and ins,lr-
ance must be transacted under strict
| supervision; but those institutions
which operate fairly and prudently
| within the law should not suffer either
from laXity of governmental supervis-
| ion with regard to others or from i'm
| prudences and frauds with which they
| have no concern.
MIR. Bryan tries in vain to meet the
criticisms that the plan proposed
would encourage reckless and dishon-
est men, who would seek deposits on
| the faith Of such AN assurance. 1t
| must not be forgotten that they do not
1 conduct their enterprises with the cN-
| pectation of failure. nor do they con-
template loss to the depositors; but
| deposits are the sinews Of banking en-
| terprise, and to the extent that such a
| guarantee would facilitate them in OBJ
tanning deposits the opportunity for the
| play OF illegitimatc purposes and the
temptation to indulge such purposes
would obviously be increased. MI.
| Bryan asks would it not be worth
something to the stakeholder in peace
of mind to know that the maximum of
his loss would be the value OF, his stock
and the 100 per cent liability, and that
no depositor could lose anythng?" 1t
an added peace of mind" on the part
of managing officials. And this diminil-
ton of anxiety and of the sense of
moral responsibility with regard to de.
posits could not fail to have it's effect
upon the prudent conduct of the bust
ness and place IL scrverer strain upon
governmental supervision. The conlli
tons under such Il plan would newt
ably tend to increase banking losses
however they might be made up. II
may be added that the guarantee fund
il it were established on a scale sutic
iently large to insure the required pro
lection, would furnish difficulties lotl
with regard to its investment and its
availability i'm emergencies.
This proposed plan does not meet
the Demand for an elastic currency
system through which the monptal'.
wants of the country may be supplied
To supply such Il system is an urgen
necessity, and its provision would obvi
ate many of the dangers which have
hitherto existed but to make bank.
pay for losses they have not caused i:
to depart from proper principles ant
to encourage improper practices"