Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1908-09-26
GUARANTY
.(Continued from page ID


depositors whose funds are loaned
are no more interested in the .solv-.
ency of these business men than the /
bank itself. The passenger on the
steamer and the owner of the steam
er are equally interested in not hav-i
ing the steamer sink. So it Is with
the depositor and the bank.
''It is said that it is the deposition
who makes banking profitable. Here
appears a misconstruction as to the
banking business. In reality, the de-
posits are only the raw materials for
profits; they must be wisely and
sillfully managed and invested or
there would be, not only no profits,
but even losses. To have profitable
result, we need skilled labor to work
up the raw materials, not only in
industry, but in banking. The mere
existence of capital does not insure
profits; everything depends upon
what is done with the capital. In
banking, we shall see that practically
everything depends upon wise, honest
and capable management.
"People deposit in banks voluntar-
lily because they get privileges in re-
turn. The banks provide the most
convenient, least expensive, and most
generally used medium of exchange
ever devised, by which payments can
be made anywhere in the land, and
all the expense of this bookkeeping
is usually given free to the deposit
tor. All the monetary service OF the
| general government, all the issues of
every kind of paper money, do not
begin to compare with the work OF
exchanging goods done by the banks
drawn by deposttors on their &C
counts. Take that away from the
depositors for twenty-four hours and
the whole trade of the country would
be paralyzed, and yet there are per-
sons SO ignorant as to say that de-
positors are not given anything in
return by the banks.
"The ignorance of commercial
banking shown by the advocates Of a
guaranty Of deposits goes still fur
Their when they demand such a guar
anty on the ground of justice to de-
positors; and they ought to have a
place wherein they could leave mon
| ey and get It again whenever they
want It. If depositor wishes these
things without the privileges of a
commercial bank, he can put his
money in a safety vault. In COM
mercial bank it is never pretended
. that If all depositors wanted their
> money they could get it. Why? Be
: cause commercial bank could not
t exist If it did not invest funds de-
4 posted with it, A solvent bank can
; always meet cash demands if given
d suitable notice of what is coming.
al Yet the agitator, who does not seem
II to know the difference between a
Il safety vault and commercial bank,
! asks for what is humanity impossible
/ las a matter of justice. He asks
! that banks should receive the de.
Z posts, but in the same breath he
i asks that they should never do any
thing with them. Justice is given
. when, and only when, the banks in.
vest in sound assets; and all deposit
3 tors can secure their, funds only WheI
the management is successful, eau
sltious and conservative. The sub
8 stance of the whole matter is to b,
found in the character Of the mar
"a agement.
e "a question which arises is do tn
ii banks recognize the fact Of thei
u quasi-public function, and that the
& must give security to depositors 70
5 exercising good Judgment in maxim
loans with the knowledge that til
stockholders will suffer heavy los
in case of error or fraud? answel
I,unequivocally, they do. In fact, th
childish ignorance shown by the az
vocates of insurance of deposits in n
To part .Cl IuSlT dI5uuuSuG 2dppC1I0 5ilOi
E. amazing than in not knowing tn;
n the banks now put up a very lars
al fund as security for depositors.
Id There are only two possible wa,
Of using guaranty fund; either f
- 4 ultimate, or for immediate REDEEM
b tion Of deposits. is it conceivab
- that the political orators do not kno
d that there is already a guaranty full
for the ultimate payment of deposit!
The capital. surplus, and undivid,
. profits, is today the buffer betwet
y. the depositors and loss. Only aft
8 the misjudgment of a bank has q
stroyed its capital, surplus, profit
4 and shareholders liability can t
depositors suffer loss.
- In view of the small loss to /
L. positors in over forty years Of t
~ national bank system which is OF
55S ono fwantv-siyfh af nna sYses- rant \