The morning Astorian. [volume] (Astoria, Oregon) 1899-1930, 1908-10-10
Views OF AN EXPERT.
n
Shall Banks De Made Liable for
One Another's Dcbts7
Recognised Authority on Financial
Questions Discusses Practical
hearings of Proposed Guar
antse Plan.


rector OK tue Mint.
: The proposal 10 require the banks Of
the country to guarantee each others
deposits owes ts present strength 70
the financial disturbance Of last fall
II 10 urged as means Of preventing
psnics, and there Is no disagreement
about tho desirabllity OF accomplish.
Ing that purpose. Most Of Us agree
that repetition Of the conditions
which existed last fall should be made
impossible, but this ls by no means the
snly way to DO It, or the best way.
For years tho advocates OF compre.
henslve currency reform have pointed
out that with $4,000, 100000 OF bank
deposits In ths country and only about
5000 100000 Of money al told IN tho
cohhtry, both In the banks and ont.
there should bs some method provided
Nv which, on the basis Of good assets,
the supply Of lawful currency could be
readily increased to meet exceptional
demands, whether such demands were
due TO seasons Of unusual business nc
tivity or to alarm among deposItors,
Their foresight aud arguments did not
avail, but they are hardly 10 be swept
on their feet now BY impatient zeal for
this new and, as they regard IT, III.
considered scheme, They stand for
complete and scientific treatment Of
the subject.
The guaranty OF deposits 10 a crude
and imperfect remedy at best It does
mot recognize or attempt to cure the
defects In our banking and currency
aystems, but aims only at persuadlng
depositors not TO draw their deposits.
The losses TO deposltors by the failure
Of national banks has become an lnsig-
nincant percentage, aud u growing lsna
Svery year, as result OF natural, evo.
lutionaFy progress in banking The
standards are being constantly raised,
and the efficiency Of oiiciai inspection
and supervision constantly improved.
The true line OF development 10 not by
any revolutionary policy, but by hold.
Ing individual bankers to yet
Strlcter account, and at the same time
enabling every properly conducted |
bank 10 readily obtain a supply oF eur
rsncy to meet all demands upon II.
The fundamental weakness In our
currency system is In the fact that It IL
not readily responsive TO the needs OF |
the country, The legitimate demand
for money varies from year to year,
and from seasot 10 season In the same
year II Is a familiar fact that thore
10 great deal more business TO be
handled from September LIST to Decem.
Der Sist each year than IN any other
four months Of the year, but there ls
no more money In the country unless
gold Is Imported for the purpose.
wonld Lead to Reckless Danhiag.
AZ a remedial measure the guaranty
Of bank deposits Is not only inadequate,
but II IL worse than Inadequate, for II
proposes to overturn the principle Of
individual responsibility by means Of
which the banking business has been
raised to ita present high standards,
and upon which all individual and 50.
cial progress Is based,
The proposal contemplates that the
public shall be relieved entirely from
the exercise Of judgment and dis.
crlminatlon In the choice OF banks, and
while It is highly desirable that oil
banks shall be made safe, to the end
that even the most ignorant and con-
iidina may be protected, II Is still true
that an alert public opinion has great
influence In maintaining proper bank.
ing standards. We cannot afford to do
without that influence.
Under present conditions the invest
tients, the personal habits, the general
character and abilities OF the banker
are under the constant scrutiny of the
continuity, and q matter OF public In.
terest, Notwithstanding occasional in
stances ID which the public has been
deceived, II may be stated as a general
proposition that an unblemIshed char
acter and 4 reputation for good busi-
ness ability and conservative judgment
have been necessary to success In the
banking business, The public looks
over the Individual who Is to receive,
and invest and be responsible for its
money with some discrimination, and
the elimination Of the unfit by the
scrutiny and composite judgment Of the
community IL a factor Of the highest
value In maintaining the standards Of
the banking business. II Is, however,
factor entirely overlooked by the ad-
yocates Of this schelne,
They calculate the Insignificant per-
centage Of loss to total deposits under
present conditions, and assume that no
greater losses would occur after char
acter ceased to be a factor In the busl-
ness, and all deposits were given blind
ly to whoever would bid highest for
them 10 the objection that this elm
ination of character as a factor in the
acquisition Of deposits must tend to
promote reckless banking, reply is
made that bankers viii be deferred
from feeklessness BY fear Of losing
their own money The reply misses the