The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1908-09-30
Is a rule kept out of tie banking bust
ness BY the unwillingness Of the public
TO entrust money to their care.
Careful Banking Best.

Careful Banking Best.
Under present conditions there are
sompensations in favor of careful and
conservative banking. There are peo
pie who are not influenced in their Sc
ection Of bank by the highest rate OF
interest offered on deposits. and who
have their suspicious aroused by the
tender of exceptional inducements.
they know that such offers put a
Itrain upon the business. and they de-
iberately prefer to place their money
Eith a banker who will not subject
himself to such strain. These deposit
hrs esteem safety above all other con-
alterations. and they are numerous
enough to exercise a very wholesome
restraint upon reckless tendencies in
reputation of doing safe business,
md cannot afford to have a reputation
Tor imprudence and speculative in
.linations And yet, although held in
check by these powerful considerations,
the pressure of competition carries the
UuSlu6SS UtdI Tie IluC StCli
now. There is too much competition
for deposits, and the ambitions of the
more venturesome members of the fra
ternity, and the pace they set, puts the
whole system under strain.
But what are likely to be the con-
1itions in the business when the public
is no longer concerned about the man
agement of a bank, and all the re-
wards for conservatism and restraints
upon recklessness are removed? The
4 considerations which in the past have
tended to safeguard the business and
advance its standards would be gone.
The public would care nothing for the
personality of the banker. Instead of
looking to the institution which receiv-
ed the deposits, the depositor would re
ly on an outside fund A tanker
might bet all the deposits on horse
races without the fact becoming a
matter of any concern to his custom
prs.
And how would the conservative.
prudent banker fare under these CON
1itions? The legitimate reward for
maintaining that character would be
lost to him. he would get no deposits
unless he bid as high for them as his
rivals, for the government would stand
behind the latter, and assure the pub
lie that they were just as safe as he,
and tax him to make them so. In
short the reckless and incompetent peo-
pie, who are now either excluded from
the banking business, or held in check
Il by the distrust which a discriminating
public feels towards them, would make
the pace to which everybody else in
the banking business would be obliged
to conform or get out of the business
Would Demoraiize Business.
The hardest competitor in any line
of business is the incompetent or dis
honest man who does anything to get
business. Such people get into the
, banking hi.siness even now. but theil
number and influence for mischief
would E greatly increased if they
were backed up by unlimited credit. IL
OlISA liittSS t-lEIt LILY IN S:3l1c que SllOl
as to the quality or service offered by
rivals, but all banke rs deal in the SAM
kind of money, and if deposits were
made joint liability, there is no rea
son why they should not go to the
bankers who offer the greatest induce
ments to attract them. The careful
banker would have no offset or protec
? ton against demoralizing competition
and he would be placed in the strang'
position of being liable for his com
2 petitor's obligations.
T All efforts to make 1t appear that tn
, interests of bankers are ON one side o
this question and the interests of de
positors on the other are untrue to tn
facts. Nothing that In the long run i
, harmful to the banking business, tina
, puts 1t under strain and tends TO low
er its standards, can be beneficial t
I depositors or the public. 1t cannot b.
advantageous to the community to hav
! its savings and working capital pas
into the hands of the venturesom
, class of bankers who will bid most TO
them. 1ue actual waste ana los
through unwise investments would In
, evitably increase. 1t would fall at frs
on the conservative bankers and penal
: lie them. Instead of an eliminat ton o
| the unfit, which is the true process o
r evolution, the tendency would be to a.
. elimination of the best Eventually III
: burden of increasing waste would hav
: to be borne by all depositors and tn
, whole community.
l Oklahoma Trial InconcIusfve.
The fact that the first bank failur
In Oklahoma after the law went int
effect was followed by immediate re
endorsement Of the depositors, prove
nothing as to the practicability of tn
:, system In the long run. The fact tina
, the State banks Of Oklahoma hav
gained deposits since the system wen
into operation, while national bank