Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1908-09-09
Bank Guarantee Plan Issue Sweeping the West

Especial Washington Correspondence of
The Argus.)
The real political sensation of the
week In Democratic circles has been
the wholly unexpected growth OF the
demand for the guaranty of bank de-
posits as provided In the Democratic
platform. think but few public men
aside from Mr.. Bryan himself had any
conception of the wildfre way in
which this issue would sweep the agri-
cultural states of the middle west A
prominent Washington official. a Re-
publican, who was in my office the
other day said that he had been travel
ing through Kansas and Nebraska and
found the people, including the bank.
ers, earnest in their demand for the
adoption CT this plan. In Kansas the
Republican state convention has put
the proposition in It's platform, thereby
presenting the phenomenal spectacle
of the party in the state taking sharp
issue with the position of the party in
the nation. Secretary Taft, who GER
tainly seems to have the courage of
his convictions, bitterly denounced the
project in a speech which by curious
coincidence was delivered on the same
day that the Republican convention in
Kansas met and adopted it.
The fact of the matter Is that the
operation of the law in Oklahoma has
been SO exceedingly successful that the
kansas banks are beginning to feel
the drain. Their depositors are with
drawing money from banks which Of
fer no security for It and sending 1t to
those In the neighboring state which
afford security prescribed by law. If
Kansas adopts the system. as 1t doubt
less will when its next legislature
meets, Nebraska will follow suit. The
plan will proceed from state to state
until the whole tier of agricultural
states bordering the Mississippi and
Missouri rivers have adopted It, This
is not mere idle speculation. but 1t Is
the well founded opinion of travellers
and correspondents who have visited
those states since the Denver conven
ton. The Republican papers in the
larger cities and in the east recognize
the danger of this issue and are con
centrating their fire upon it.. The Dem
ocrats welcome these attacks and re-
joice that the utterances of both Sec
rotary Taft and President Roosevelt
have made the issue squarely on this
point.
One Attack Confuted.
Recently through some politica
agency most of the big city dailies
printed an article to the effect that the
system of bank deposits had beer
tried in New York state and failed
The authority cited was q certain his
tory of the American banking system
which contained the statement that In
1920 the banks of New York establish
ed guaranty fund which resulted In
transportation and in ultimate disas
ter. Comparatively few people vii
think that the experience of eighty
years ago. before the banking sySsen
had been at all perfected, should BIZ
applied to conditions existing today
But, even IL II were. investigation
shows that the cases are not parallel
II was not the creation of q fund t.
be held by the government as custo
dian. a fund raised by tax upon ths
deposits upon the Lanks, but wa.
rather system OF mutual underwrit
ing of notes issued by the banks, /,
method which naturally would lead I,
oyerissue and transportation. Ye
even as 1t was it worked successful,
for number of years. And even in tn
panic of 1897 none of the banks in thi
combination went down. About 1S4(
however. some Of them failed, and tn
law was amended so that the accumr
lated fund could be used for the pay
ment OF other creditors than the hold
ers OF notes. The fund proved insu1
fcient for this purpose, and the Who'll
plan was abandoned. The New Yor