Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1908-09-26
GUARANTY
(Continued from page q

absolute security. Why not ask a
clergyman on becoming pastor Of a
church, TO give absolute security
that no one in his flock will ever tell
lie, or commit an error in con-
duct, or go to hell fire? Why not
make the doctors give a guaranty
that no patient shall ever die?
Banks, or any other business en-
terprise can no more promise abso-
Lutte security than a father can prom
ise the moon to a spoiled baby. There
will always be risks as long as men
are fallible. The management is
best that makes the least mistakes.
If you require absolute security you
require commercial banks to become
safety deposit vaults. There is no
alternative. The man who demands
absolute security writes himself down
as foolish visionary, ignorant of
practical business methods.
| "The scheme to insure deposits re-
quires all banks, good and bad, to
contribute to a fund to pay off de-
positors in institutions that have
| failed. The more successful the bank
the more it must pay into the fund;
the less successful the bank the less
1t pays into the fund. The success
full are to pay for the mismanagment
of the unsuccessful. If a burglar
robs another mans house, go to the
most honest man in the place and
rob him to pay for the loss of the
other fellow; it will increase the
eagerness Of all men to be honest
and discourage burglars. The scheme
Is perfect; would work perfectly in an
insane asylum. Mr.. Bryan has we'll
said, and we must all agree with
A him, sone of the things want to see
adopted in the form of regulation
Of banks in the near future, is the
law that will put the penalty on the
4 right man and not on the community.
If the English language conveys
meaning clearly those words mean
i that Mr.. Bryan favors penaliZing the
man who cheated his depositors by
Il bad loans and not the man who pro-
i tected his depositor by safe loans.
q If that is the case it is logical to
suppose that Mr.. Bryan is radically
opposed to the guaranty of deposits
The only way to control the initial
act of each bank when making 9
loan is by increasing the rewards tc
sound and conservative banking. il
E cannot be done by saying that if BAG
loans are made, the penalty for then
shall fall, not on the unwise banker
who made them put on the innocent
and wise bankers who had nothing
whatever to do with the bad loans
That is dangerous political, as vel
as banking morals. To suggest thai
sound banks. should pay the custo
mers of unsound banks in cases Of
. failure puts the responsibility ant
the penalty on the wrong persons
and violates every principle of jus
tice and fairness between men.
"The persistent failure to under
stand the patent facts of banking il
disclosed, also, in the contention
: that the guaranty sysem would dis
courage reckless banking. Mr.. Bryan
says, Under this plan of securing thu
depositor the stakeholder loses al
4 that he has before any other banl
loses anything. Not only does h
I lose all his stock, but he also lose
!, the penalty that the law fixes, ant
/, the loss of the stock and the penal
7, ty are enough to make him exercise
), care It really amazes one to flint
e system as this, and yet this state
I ment comes from one who does no
| hesitate to instruct and to threaten
q the bankers. 1t is possible that h
!, does not know that under existin!
law every bank must first loose all it
: capital, surplus, undivided profits
duu SIcChAOIuStS ,USIOiC Lu'
( iidepositor loses? Then from Mr.
Al Bryan's own point Of view, just a.
9 things are today, we have all tn
. conditions to Insure vigilance just a
: we'll as if we had the much vauntet
! guaranty of deposits.
: 1.-THE worst monetary fallacy il
! the arguments of the guaranty theo
rists is in the claim that, if estab
! lished, the system would draw s.
] much money into the banks as t,
! remove all necessity of creating al
emergency circulation. The erro
here is in confusing property witt
) the medium of exchange by. whicl
i the goods are exchanged.
i FINALLY we may say that the guar
8 anty of deposits appears now chiefl
J. -becaxse it is an appeal to 100000
depositors, although on an impossihl
{ and impracticable basis; and that
is an appeal to banks and stockhold