The Washington herald., 1908-08-28


and. If necessary. they viii send their
money 10 another State
For many years efforts have been
made in Congress and in the various
states 10 secure a law guaranteeing de
posits. but the influence Of the great
banking Institutions has been sufficient 10
prevent action.
The Republican platform is silent on
the subject. and the Republican candidate
not only does not advocate a compulsory
system. but specifically and emphatically
opposes IL
Mr.. Taft complains that no one can
fo-esee the burden which under this sys-
TEN would be imposed upon the sound
and conservative bankers Of the country
By this obligation TO make good the losses
caused by the reckless, speculative, and
dishonest men, &c. We have the past 70
guide US. and We have reason to believe
that the loss viii be less N the future
than in the past, because when banks be-
come mutually responsible for each 9th
er's deposits they Will be sufficiently in
terested in each other TO favor better
regulation and greater restrictions
Big Loans Dangerous.
The chief cause Of bank failures is the
making OF excessive loans 10 directors or
1 officials of the bank This Is the fruitful
cause Of disaster. and it has been i'm
possible 10 secure legislation protecting
banks from their own officials and d.
rectors- Why Because there has been
10 mutual responsfbIIity- When all banks
become liable for the deposits Of each.
the stockholders viii insist upon the en-
/ actmeut of law making ii a criminal
ofense for a bank official % loan more
than the prescribed amount TO one indi-
viduaI At present We have a law pro-
nibi-inK the lOauiug Of more than one
tenth Of the capital and surplus 20 one
person or corporation. but the law is only
I directory OF course. the Comptroller
E can suspend a bank Il IL violates the law.
but the law is not enforced. because the
f enforcement Of such a law would throw
Z the punishment upon innocent st0ckhOld-
[ ers and upon the community. since The
SUSPENSION Of a. bank infiCts a great loss
/ upon stockholders and disJurbs the bust
I ness OF the city or town in which the
Z bank is located
The law should make il a criminal Of
/ tense TO loan more than the prescribed
{ amount 10 one person. and we would
E probably be able to secure the passage Of
/ a law prohibiting market speculation by
: bank officials
The Oklahoma plan is better. A bank
1 recently failed in Oklahoma Within
I fOrty-eiEht minutes after the notice Of
suspension the officer IN charge had au-
/ thurity to pay all depositors. and then the
} banking board proceeded 10 collect che
/ assets Of the bank and 20 prosecute the
/ officials criulually- When the business
was closed Up the stockholders passed a
I resolution thanking the State board for its
prompt action. the action Of the board
I being "A protection to the stockholders
as well as to The depositors and 10 the
public generally
/ Compare this failure under the guar
anty system with a failure where there
. is no guaranty. In Oklahoma the bank
] commissions teIephoned the farmers TO
come in and get their money. and the an
svyer was. I ann busy to-day with my
crop. I Viii be in in a day or two
An Example in Cleveland.
In Cleveland. Ohio. a bank failed
nounced- Twelve hundred infuriated
Italians stormed the closed doors Of the
busted banking house Of Costan Liopea
in Orange street to-day. The police
drove the crowd back
I An objection is sometimes made 10
the guaranty law that a new bank would
start up across the street and. being
able TO promise its depositors absolute
security through the guaranty law. could
draw the deposits away from c0nserva-
lively mana Eed banks by offering a higher
rate of interest than the latter could pay
This objection is urged as II il were an
{ unanSwera bie one But let US see how
easily il can be met. Since the law makes
all OF the banks liable for the obligations
Of each bank. the law should prohibit
I any abuse Of this security by any bank.
and IN oklahoma the banking board has
already fixed the rate Of interest that can
be paid TO depositors- According TO the
rules OF the banking board. no bank Is
permitted 10 pay more than Per cent
on short time deposits or more than
per cent on time deposits running for
six months OF more.
Y cannot pass from this subject with
4 out referring to the fact that the big