Los Angeles herald., 1908-09-24
THE TIMES CHANGE OF
FRONT

/ ~ ttSO SdASAltiB tiaC HAtNtGh AoaA,
appearing in a recent issue of our
esteemed Republican morning contem-
porary. furnish an entertaining and
informing example Of what happens to
public journal when 1t abrogates its
power of Independent reasoning and
permits other people, even though they
be its party leaders, to do its thinking
for it.
On the goth inst. The Herald had the
pleasure of reproducing for the infor-
nation of its readers an editorial pub
lished by our contemporary on the 23rd
day of January. 1907, which, we are
happy to compliment our contemporary
by saying, was not only one of the
best arguments in favor of the insur-
ance of bank deposits by the govern
ment that it has been our pleasure to
see, but was, from a strictly financial
standpoint, a notable contribution to
the science of finance.
We take pleasure also in expressing
the belief that this very logical and
convincing editorial represented the
real convictions and the untrammeled
power of cerebration of our contem-
porary's editorial department. Like
wise we are compelled by ours honest
convictions to say that we do not be-
lieve the cartoon and editorial above
referred to as recently appearing in
the columns of our contemporary were
the product of its uncontrolled intelli-
gence and logic, or should be accepted
as such.
| We say this because the editorial and
the idea for which the cartoon stands
are so completely surcharged with false
logic and misleading deductions.
| After adverting to Mr.. Bryan's atti-
tude upon the tariff, our contempo-
rary says:
| Another question of vital Importance
is, what is his idea this year If not
Free Silver? Here is the measure Of
his wisdom-not what he has aban-
doned but what he has taken up.
"The favorite Bryan idea is a
tax on banks to guarantee de-
posits. Is that sound?"
Our contemporary. after supposing
that the state of New York shall collect
an insurance fund by the levy of a per
cent tax upon bank deposits, and that
this fund shall be loaned to banks, and
that these loans shall be tied up by
run upon the banks holding the funds
caused by a lack of confidence, trt-
| umphantly says:
Now we have done all that is to be
done. So long as things run smoothly,
banks meet their obligations. But we
are ready for crisis. 1t comes and a
run on the banks. They do as they
always do, close their doors in order
to protect their depositors one from
the other, and loi the guarantee fund
is also locked UP in the vaults and
cannot be reached. The financial kit
ten has not caught her tail yet. Neither
is Mr. Bryan new Bryan.
But do not deposit the fund. Keep
1t in safe.
"Finel While things run smoothly
and there is no need of a guarantee.
| the fund lies idle. A storm breaks and
| there comes a run on the banks. Get
the fund out and pay off the depositors.
That works until per cent of the de-
posits are paid out, and then the 99
per cent are caught just where they
have always been.
1.-THE kitten has not caught her tail,
and Mr.. Bryan is the same old
Bryan"
The editorial which our contemporary |
produced when 1t was doing it's own
thinking and before it had resigned |
that function in behalf of it's party's
candidate for president furnishes such
logical and conclusive answer to this
suppositltlous case that we cannot
make a more convincing reply than by
quoting a portion of it, which is as
follows:
"It is needless to point out all
the good results to follow from
the passage of this amendment
Gan amendment providing for the
insurance by the government of
national bank deposits) to the
banking act. For one thing it
would preclude runs on national
banks. If assured by Uncle Sam
that he could not lose dollar,
depositor would not run to with
draw his funds in time of panic.
This assurance would prevent
many bank failure.
Bankers know that numerous per-
sons, many of them possessed of large
sums and accustomed to do business,
keep their money in safe deposit boxes
and other receptacles out of the general
circulation of the country, thus reduc-
ing the amount of the active working
capital of the country by MILLIONS every
day in every year.
"The amendment here suggested
would draw out of their hiding places
probably 95 per cent of all those funds.
No person not a crank ever thinks of
refusing to take a national bank note,
although it is not legal tender. The
government stands behind the national
bank notes as solidly as behind the
notes issued by the government itself.
IF it were only generally un-
derstood that this fund guaran-
teeing deposits held by national
banks was in the hands of the
government and that the gov
ernment stood ready to make
good every dollar of loss to de-
positors resulting from the failure