Bismarck daily tribune., 1908-10-02

be low at another time. Hence,
whatever limitation is imposed ex-
cept when the normal interest is the
highest, there must always be an
opportunity for those inviting de-|
posfts to pay a higher rate than that
which conservative bankers would
pay.
Losses Would Increase.
..If the. losses were limited to one
twenty-sixth Of one percent the.
amount of the tax on the deposit Of
course would be small and each
bank could readily pay 1t, although
the principle would be an entire de-
parture from equity; but the effect
of a guaranty system on the char
acter Of banking would be such that
the losses arising from reck1essness
would greatly increase, and the tax
must increase to meet the losses on
Eeyery bank proposition. Instead of
loss equal to one twenty sixth Of one
per cent annually it would rapidly
increase in every financial string
ency. ss.s
1.-TWO objections are made to the
conclusion that an enforced guaranty
| system would lead to reckl klessness
/ and disaster in banking. One is that
the government examinations would
prevent and the other is that it is
an insult to the banking community
I to assume that the natiinaI bankers
4 of this country, in view Of their pres.
Ient high character, would yield to
/ the temptation to recklessness pre-.
1 sented to the system answer to
i the first objection that the govern
ment examinations do not now pre-
4 vent banks from failing; that 1t is
\ difficult for the bank examiner t1
i discover the unwise reckIessness
and speculative loans. and that of.
ten such loans are made between
4 government examinations, and theI
i the evil is done and cannot be rem
4 edied by strict supervision. Second
while ! fully concede the genera
4 high character of the bankers thru
! out this country, my point is tha
i the opportunity to obtain deposits
4 and invest them on very little capi
tai afforded by the guaranty secur
4 ity, will attract into the banking
business men of no experience ami
q Of speculative tendencies and will
4 distinctly lower the tone Of the bank
,i ing business. s.5
2 The Kansas Plan.
!. It is said by Mr.. Bryan that tn
! Republicans a Kansas by adoptini
y q plank in favor. of a kind of guar
!, anty of deposits, rebuke me for nj
9 opposition to the plan outlined i
n the Democratic platform. This
Z entirely inaccurate. The Republ
/ cans of Kansas have recommends
9 the passage of a law by which bank
2 IL they choose, may enter into a,
s rangement with other banks b
4 which they shall all be subject t
9 an assessment to pay the loss to d,
Q positors In any bank in the agree
1 ment. It is the voluntary feature 4
the Kansas proposal that makes th
o radical difference between it an
t that Of the Democratic platform.
]. ts entirely conceivable that banks !
!. the same neighborhood and With
= the observation Of each other ma
4 proftably and safely accept an
y guaranty the security OF all for tt
(, benefit Of each, especially when the
a can select their partners.
Y One OF the greatest merits CLAIM
el ed for the enforced guaranty Of d
n posts is that 1t will prevent panic
'el It is Sufficient to say that the pie
81 proposed cannot prevent panics.
q panic Is not stayed by the pronai.