The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1908-08-28

by their ballots demand either the guar
anteed bank or the postal savings bank.
| Can the financiers prevent the carrying
out of this demand?
The Republican platform does not go
| into detail but ii is fair to assume that
the postal savings bank plank is intended
! as an endorsement of the postal savings
/ bank system proposed by the president
and the postmaster general. Under this
plan the federal government would invite
the deposit of savings limit being placed
upon the amount that each person or each
| family could deposit, for he uses a check
| ing account, instead of a savings account;
but no one can doubt that the successful
| operation of government savings BANK
would ultimately lead TO an extension OF
the plan until the government bank would
include the ordinary checking account and
be open TO deposits without limit 1t would
mean long contest between the deposit
orS and the bankers, but q contest which
must in the end be decided on the side of
the depOsitors. The banker must decide,
therefore. whether he will favor a postal
savings bank which. in the absence OF
| the guaranty bank, will grow until IL alb
serbs the banking business, or preserve
the present system of banking by giving
TO the people, through a guaranty law.
the protection which they must otherwise
| find in a government bank.
Change Too Radical.
| The Democratic plan, therefore. contem-
plates less radical change than the Re-
publican plan In his notification speech,
| Mr.. Taft charged the Democrats with be-
| ing SOcialistic in some of their remedies.
! The charge was not well founded. but l
might reply by charging him with advo-
eating an unnecessary extension of the
| government sphere of activity in the es
| ia blishment of the postal savings bank,
when the guaranteed bank would answer
the same purpose without any consider
able increase in the number of government
| I thf1- tla hayal-
attend to the banking business than to
have it transferred TO the government,
and because / prefer to have the banking
business done by the banks rather than
by the government. L urge the guaranty
of deposits as the easiest solution of our
difficulties.
There are only 10000 banks. while there
are 100000 depositors, and l do not hes
itate to declare that in conflict between
the two the depositorS have a prior claim
to consideration. If we estimate the aver
age number of stockholders of each bank
at SeVenty-fiVe-and that is a liberal eS-
timate-the total number of stockholders
would only be a million and half. or
one-tenth as many as there are depoSitors
The stakeholder is not compelled to buy
stock while the depositor Is compelled to
use the banks. both for his own sake and
for the sake of the community, for only
by using the banks can he keep his mon
ey partof the circulating medium. The
guaranty law, therefore, brings the great
est good to the greatest number, as well
as to those who have the greater equity
upon their side.
There is another reason why the claim
of the depositor is superior to the claim
of the stakeholder. The stakeholder has
voice in the selection of the bank Off
Gals; the deDOsitor has not. II any one
must lose, therefore, as the result of bad
management, it ought to be the stockhold-
er rather than the depostor. And, / ven
ture to ask. if the bankers will not trust
each other why should they expect the de-
positors to trust the banks?
Justice to Both.
We are fortunate. however. in that we
are not compelled to choose between JUS
tice to the depositor and justice to the
stakeholder, for as has been shown before,
the plan which we propose not only does
justice to both, but brings advantage to
both. More than that. the plan which we
propose protects the banker-and 1t is his
only protection-againSt the establishment
of a government bank. with indefinite en-
croachments upon the bankers business.
With the guaranteed bank established
government savings banks would only be
needed in the towns and Villages where
there were no guaranteed banks.
If we had to choose between the inter-
ests of the bank and the interests of the
community, we would be compelled to pro-
tect the interests of the community first;
but here. too, we are fortunate. for we are
not driven TO this alternative. That which
protects the community protects the bank
also. for when there are several banks in
the community. the failure of one often
causes a run upon the others, and the in
solVency of one bank is such a menace TO
the solvency of others that the solvent
banks often join together and assume the
liabilities of the insOlvent one for their
own protection. AS an Illustration of this
| point to the action of the Chicago banks
in assuming the liabilities of the Walsh
banks. at heavy loss to themselves.
There is another advantage which the
guaranty of depositorS brings to the banks
1t protects the reserves deposited in 9TH
er banks. During the panic last fall the
reserves caused the most of the trouble.
The small banks wanted to withdraw their
reserves from the city banks, and the big
banks in the cities were not prepared tu
meet the strain. With deposits guaranteed
there would be no runs on local banks and
no sudden withdrawal of reserves.
y And still another advantage, the
4 guaranteed bank, by drawing money y
4 from hiding and by preventing runs +
\ on the bank, would greatly lessen the =
= need for an emergency currency. 4
A Pioneer in Reform.
I have selected the capital of the state
of Kansas as the most appropriate place
for the delivery of speech upon this sub
ject, because your neighbor upon the south
has been a pioneer in this reform. Her
plan, as you know, has been such signal
success that deposits have been drawn
across the line from your state into Okla
homa. The alarm caused by this invasion
of your banking territory caused your gov
ernor to include in his call for a special
session a recommendation of the passage
of a law similar to that of Oklahoma
When the legislature met, however, the
influence of the large banks was Suffi-