Ottumwa tri-weekly courier. [volume] (Ottumwa, Iowa) 1903-1916, 1908-10-01
PLAN
|SOPPOSED BY
The BANKERS
IN SPEECH TODAY BY COL. FRIES
AND IN RESOLUTION ADOPTED
FINANclERs GO ON RECORD
AGAINST SCHEME.

paHk SeCtlon Or the American Bank
ers' association occurred when the
questions of the guaranty of bank de-
posits was taken up.
John Schuette of Wisconsin was the
only speaker in favor of the guaranty
of bank deposits. He opposed the
establishment OF postal savings banks
on the ground that it would establish
$4,000 banks in the country to com
pete with the other banks of the
country. He favored the guaranty
bank deposit plan in order to avert
the establishment of the postal saw
ings banks and declared that the bank
ers of the country would have to face
one or the other Of these issues.
Resolution Scores Guaranty Plan.
Former Gov. Myron T. Herrick Of
Ohio then offered the following reso-
luton:
Whereas, This savings bank section
of the American Bankers association
| represents the savings people Of the
| United States; and,
| Whereas, The record of these banks
for conservatism stability, and un-
selfish devotion to the interest of
their depositors is unparalleled in any
country in the world land,
! Whereas, The loss to their deposit
ors has been SO small as to be abso-
lutely negligible quantity: therefore,
| be 1t
| Resolved, That inasmuch as any
plan or scheme to make each of these
banks responsible by taxation or as
sessment of the acts of one another
or to connect them with the national
banking system Is economically un-
sound in principle, contiscatory in
form, and inimical to the best in
terest of its depositors, stockhold-
ers, and borrowers. 1t would dis
courage individual initiative, the best
product of the American mind 1t is
| specious form of paternalism and
socialism. 1t would tend to en-
courage speculation and an undue
expansion Of credit. Therefore, be it
Resolved, That we enter theh most
solemn protest against enaction into
law, either by states or the nation,
of any principles so subversive to
sound economics and so revolutionary
in character.
Following a heated debate Mr.. Her
| rick's resolution was adopted.
Fries Opposes Bank Guaranty.
| Col. F. H. Fries, president Of the
Wachovia Loan & Trust company of
| Winston-Salem, n. c., spoke before
the trust company section on "Radi-
calism and Conservatism in Financial
Measures and Legislation" He devot-
ed considerable part Of his address
Ito the present much discussed prin-
ciple of guaranty Of bank deposits.
He said in part.
'It is not new idea," he declared,
'and where 1t has been tried in this
country 1t has failed. 1t does not seem
to harmonic with the ideas of Dem.
ocratic form of government such as
ours heretofore has been. More than
that, it Is bad for the government to
attempt to guarantee deposits of one
set of financial institutions to the
detriment of others, and that too by a
tax that takes from the prosperous
and conservative to make good the
losses Of the incompetent and specula.
tive, or for the government to assume
the losses itself In the effort to care
for the people, who should care for
themselves, and who would do so to
their greater good If left alone.
This fund Is called guaranty
fund and the idea is prevalent that
the government stands for all bank
losses. This Is not So 1t is not a
guaranty fund at all, it is simply a
segregation Of a certain per cent OF
each banks assets into a common
fund against which the losses are
ol,1 q .z1J
losses are paid; if it is insufficient, as
was the case in the panic of 1897
when the plan was tried in New York
state, the losses are not paid There
is no guaranty about It,
Would Danish Conservatism.
Under the proposed measure the
bank would be taxed for guaranty
fund whether it wills it or not, and
that too not for the benefit of its own
customers or depositors, but for those
Of another and perhaps far distant
bank over which it has absolutely nc
control and Of which 1t has perhaps
no knowledge, except that It's man.
agement has been faulty and it's end
premature.
'The influence Of such measure
would. be detrimental to the bank
the bankers and the people, under
such law the bank itself would have
no special inducement to accumulate
a large capital and surplus or build
up a name for conservative manage.
ment. On the contrary the interest OF
the stockholders would be best served
by the prompt distribution of its earn.
ings and reduction Of it's capital to
the least amount that 1t could sue
cessfully operate with, while profits
and not safety and reputation would
be it's main concern. The con
seriousness Of having deposits gauran.
teed, would give to the speculatively
inclined banker just the assurance
that would lead him to take undue
risks for the sake of extra profit and
to the lazy and slothful it would give
him confidence that would cause him
to become less vigilent and careful
\ while TO the people it would give a
narcotic that would render them less
watchful and more Indifferent to true
merit and trustWorthiness.''