New-York tribune., 1908-06-12
GUARANTEED DEPOSITS.
J. b. Forgan Thinks Such Lac
Uould Result DisdstrOuSty.

Peoria H.. June l..-James b. Forgan. president
of the First National sank of Chicago. spoke be-
fore ane Bankers Association OF Illinois to-day on
the question. should national bank deposits he
guaranteed by the government or by deposit
with the government, in either case the necessary
fund to be raised by taxing all the banks on ther
Deposits He said in part:
In the recent public discussion of this question
Affirmative have used plausible argumeniIbS' ib
which VIII undoubiedly appeaI ~. 20 oni,ies of the
proposition desire 10 he relieved OF the heCss's
discriminating between one bank and another am, anu
10 have the assurance that their deposit rs ansC-
lutely safe in whatever bank 1t may b l,i ne n
would put the people sleep and give the rogpes @
t6ev should be treated as children or nonentities
and relieved by their government OF the neceioH i
in their nersonal affairs. 1t would certainly not
tend to improve either their business acuineh o
Let 1s anaTze the relations existing between
anything in that relationship TO Justify The PROPOSE ,
that in the banking business tne good s0ed 80 nav
be taxed pay for the bad. abillty taxed 10 f%s
for incompetency, honesty taxed to pay Tor as
honeSy P ineKperienoe and lack Of training aud
knowledge taxed 10 pay for the mlstahes Oh 1s
Il has been charged that bankers opposed ,o;a to
stookhoiders above the interests Of their depositors
and that they are essentiaIy selnsh IN s SO uoIS:
Those who make this charge take an erroneous
view of the relations between q bank and its de-
positoTs- =, ...- =.
his depositors better than by carefully looking
ofrp-
seement Of his business he cannot possibly sepa--
rate interests OF his stockholders from those ~
his deposors 1t is equally in the interest OF poIn
that the bank should be kept strong. liquid ana
clean as TO assets. that lis management should
he conservative regard loans, and that proper
F1e mixing principles should be strictly adhered to
After more than forty years experience of hank
ing under q system in connection with which the
r1hic has had every incentive to discriminate be
tween good bad banks the record OF loss TO de-
rositors is one-twenty-sixth Of per cent per
mum With all incentive for such discrimination re-
moved. who can tell what percentage might be re-
rred during forty years? II Is quite con-
eivabie il might lead utter collapse of our
banking system and ell the ranlifying commercial
interests interviewer with il.
Careful consideration cannot fail 10 reveal the
Injustice of taxing the sound and conservatively
managed hanks which in the great majority.
for the benefit of the few that unsound and
recklesslv managed. The sound banks do not need
end would have any call on the guarantee
fund a which they would contribute. while the
unsound and recbessly managed institutlons wona
build rp their business both sides of their bal
ence Sheets @. in both their deposits and their
Iaaps-bv granting their customers accomnoda-
tions contrary all sound banking principles and
Anvrhine that can he legally and equitably done
banks and of the engaged in the banking bsi-
ness to protect the honest banker against the dis
honest one. to keep those engaged in the business
honest and punish those who are dishonest
purposes cannot he made too rigid. But TO at
tempt 70 make all banks equally safe by passing
p law that would establish artificial credit for
The fncornpetent and the dishonest. enabling them
TO offer ali sorts OF specous Inducements to the
rrIhlic for business and thus creating inegitimate
servative bankers would have in the long run con-
and disastrous results