The daily sentinel., 1908-08-28

it was certain that he could enjoy
any profit that would accrue, while
the risk would have to be assumed
by his honest and Woodworking fell
low
He even pictures dire disaster
and declares that if the proposal
were adopted exactly as the Demo-
cratic platform suggests, it would
bring the whole banking system of
the country down in ruin.
LAS an afterthought he suggests
that voluntary system might be toll
Grated. but as his objections to
compulsory system apply just as well
to voluntary system we may fairly
count him against all legislation
which has for its object the guaranty
of depositors.
"As Mr.. Tafts argument is that
presented by the big banks which
put their own selfish interests above
the welfare of the depositors and the
safety of the community, it is worth
while to answer the several PROPOSE
tions which he advances.
LET us take the first sentence,
that the honest and prudent banker
would he taxed to make up for the
dishonesty and imprudence of Others
Is not this true of all restrictions on
banking: Does not the honest and
suffer in order that the depositor
may be protected from the dishonest
and imprudent? If we had no bank
ing laws at all. and banking was done
by private individuals. the honest and
prudent banker would save the
money that he now pays for enforced
examinations of his bank, and he
could at times make interest on Il
part of the money which he is now
| II y A.. l.. l..
rigid reserve. But because some
bankers are not prudent, these laws
place n burden upon the good as well
rs upon the bad, it being difficult to
distinguish the prudent banker from
the imprudcnt one until a bank ac-
tually fails.
| In like manner it might be said
that if all people were careful about
| fire, fire insurance rates need not be
as high as they are, but the careful
have to pay higher rates than they
should because some are not careful
| Life insurance rates are higher than
would be necessary to cover the ac-
tual risk If everybody took care of
his health, and here, too, the eau
tfous are burdened because some are
careless of their health. All insur-
| ance is open to the same objection,
and yet insurance of all forms is
growing, and the insurance of de-
| positors is growing in popularity
more rapidly than any other form of
! insurance-and, l may add, it yields
the largest return on the investment
Mr.. Taft complains that no one
can forsee the burden which under
this system 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, etc. We have the past to guide
| us, and we have reason to believe
that the loss will be less in the future
than in the past, because when banks
become mutually responsible for each
others deposits they will be suffic-
iently interested in each other to
favor better regulation and greater
restrictions.
What has Mr. Taft done to pro-
tect depositors from recklessness and
speculation? While he refuses to
protect depositors. he praises the
Aldrich-Vreeland law. which invites
speculation and stock jobbing. In
declaring that the system proposed
by the Democrats would remove all
safeguards against reckessness in
banking Mr.. Taft betrays an ignor-
ance of the subject. for the plan does
not propose the removal of any safe
| guards. In fact, it contemplates
stricter regulations of the banks. and
Oklahoma has already made the
banking regulations stricter.
HE declares that the only benefit
would accrue to the sPeculator, who
would be delighted to enter the bank
! ing business when it was certain that
he could enjoy any profit that would
accrue, while the risk would have to
be assumed by his honest ana hard
working fellow The present bank
| ing law requires that a certain
amount of capital shall be invested
in the business, and that law would
still stand To enter the banking
business. therefore. a man would
either have to have the capital him
se.f or secure the confidence of men
who had the capital. And this cap
| ital. together with the 100 per cent
liability, would be a guaranty that
the stockholders would not inten-
tionally select careless officials. Why
would 'speculator' be delighted to
enter the banking business under
the guaranty system? He is not re-
lieved from pecuniary obligation, nor
is he relieved from criminal liability.
He would have nothing to gain by
carelessness, nor would the stock
holders have anything to gain by in
difference.
1.-The chief cause of bank failures
rs the making of excessive loans to
directors or officials of the bank.
This is the fruitful cause of disaster
and Ii has been impossible to secure
Legislation protecting banks from
their own officials and directors.
Why? Because there has been no
mutual responsibility. When all
banks become liable for the deposits
of each, the stockholders will insist
upon the enactment of "a law making