The morning Astorian. [volume] (Astoria, Oregon) 1899-1930, 1908-09-27
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inissiblc, under the national banking
act for banks to organize with d capi-
tal Of $72s,000 The security which
banks offer the deposilors depends
upon the amount OF capital, the
amount Of surplus and public conf
dcnce III the officers Of little cxpcr-
icncc and indifferent reputation can
not offer the public exactly the same
security for the payment Of deposits
as n bank with 4 capital Of $500,000 q
surplus OF $250000 and with officers
known to be honest and able. De.
posilors, therefore insofar as security
Of deposits IA concerned are as likely
to make their deposits In the $z5,00O
banks as In the bank with the capital
Of ss00,Oo0.
ut Is proposed TO introduce into
the law limitation as 10 the amount
Of interest which Under the system
can be offered and paid on deposits.
This Il Is said will prevent banks from
offering excessive rates 81 interest 70
obtain deposits A limitation Of this
sort Is difficult TO FIX, because condi-
tons vary so much IN different parts
OF the country That which would be
high In one part o. the country would
be low IN another, and that which
wonid be high In one season and
pader certain conditions would be
fow At another time, Hence, whatever
limitation Is imposed. except when the
normal interest Is highest there must
always be an opportunity for those
inviting deposits % pay q higher
rate than that which conservative
bankers would pay,
III the losses were limited to one
twenty-sixth Of one per cent the
amour, OF The tax on deposits OF
course would be small and each bank
could readily pay Il, although the
principal would be an entire depart
urc from equity; but the effect OF o
guarantee system on the character OF
banking would be such that the losses
arising from recklessness would great
~ increase, and the tax must increase
10 meet the losses on every bank IN
proportion. Instead Of loss equal 20
ono ,wenty.sixth of one per cent al.
nually II would rapidly increase in
every financial stringeney, Two OBJ
jections are made to the conclusion
that an enforced guaranty system
would lead to reckless and disaster
in banking. One Is that the govern
ment examinations would prevent,
and the other is that an insult TO the
banking community TO assume that
the national bankers OF this country,
in view OF their present high charae.
ter would yield 10 the temptation 70
reckIessness presented by the system,
/ answer to the first objection that
the government examinations do not
now prvent banks from falling that
il Is difficult for bank examiner to
discover the unwise reeklessness and
speculative loans, and that often
such loans are made between the
government examinations and then
the evil is done and cannot be rene
died by strict supervision. Second,
while / fully concedc the general
high character OF the bankers
throughout this country, my point is
that the opportunity 70 obtain de-
posts and invest them on very little
capital afforded by the guaranty Sc
curity will attract into the banking
business men OF no experience and OF
speculative tendencies and will dis
tinetly lower the tone OF the banking
business
THE KANSAS Law.
1T has been said BY Mr., Bryan that
,A republicans OF Kansas by adopt
insS a plank in favor Of kind Of
guaranty OF deposits, rebukc me Tor
my opposition to the plan outlined in
the democratic platform, This is en-
tirely inaccurate. The republicans OF
Kansas have recommended the
passage Of law by which banks IT
they choose may enter into arrange
ments with other banks by which
they shall all be subject to an assess