The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1908-08-28

welfare of the depOSitOrS and The safe
II of the community il is worth
while to answer the several PROPOSE
tons which ne advances.
Bryan's Analysis.
let Us take the first sentence, thai
the honest and prudent banker would
be taxed to make up for the Lishon-
csty and imDrUdcTcc Of others" Is
not this true of all restrictions on
banking? Does not the honest and
prudent banker under existing laws
suffer in order that ;h9 dppCsItO- may
he protected from the dishonest ana
imprUdent2 If We had no banking
laws at all. and banking was done by
private individuals the honest ana
prudent banker would save he money
that he now pays for enforced CXam-
nations of his bank. and he could At
times make interest on Il part of the
money which he Is now required 10
keep in his vault as a rigid reserve.
But because sorac bankers are NOT
prudent, these laws place a burd eH
upon the good as well as upon tlC
bad, il being difficult To distinguish
the prudent banker from the impTu-
dent one until a bank actually fails
In like manner it might be said that
if all people were careful about fire
fire insurance rates need not he as
high as they are. but the careful
have to pay higher rates than they
should because some are not careful
Life insurance rates are lighcr than
would be necessary to cover the ac-
tual risk if everybody took care OF
his health, and here, too. the cautious
are burdened because some are care
less of their health. All insurance is
open TO the same objection, and yet
insurance Of all forms is growing. ana
the insurance of depOSitOTS is grow
ing in popularity more rapidly than
any other form of insuranCe-and.
may add. it Yields the largest return
on the investment
Mr.. Taft claims that mo one can
foresee the burden which under this
system would be imposed upon the
sound and conservative bankers OF
the country by this obligation to make
good the losses caused by the reck-
less, speculative and dishonest men.
etc We have the past to guide Us.
and we have reason to believe that
the loss will be less in the future than
in the past, because when banks be-
come mutually responsible for each
others deposits they will be sufficient
~ interested in each other to favor
better regulation and greater rcstTiC-
lions
Taft Uphoids Speculation.
What has Mr.. Taft done TO protect
depOsitOTs from reckIessness and spec
ulatiOn? While he refuses to protect
depositors, he praises the Aldric1-
Vreeland law. which invites specula-
ton and stock Jobbing. In declaring
that the system proposed by the demo-
Gratis would remove all safeguards
against TeckleSSness in banking" Mr.
Taft betrayS an ignorance Of the sub
ject, for the plan does not propose the
removal of any safeguards In fact. il
COntemplateS StriCter regulations Of
the banks, and Oklahoma has already
made the banking regulations strict
e.
He declares that the only benefit
would accrue TO the Spectator. VINO
would be delighted 10 enter the bank
ing business when it was certain that
he could enjoy any profit that would
accrue, while the risk would have to
be assumed by his honest and hard
working fellow" The present bank
ing law requires that certain amount
of capital shall be invested in the
business. and that law would still
stand To enter the banking busi-
ness, therefore, a man would either
have to have the capital himself or
secure the confidence OF men who
nsj the capital And this capital. to-
sether with the leo yer cent liability.
would be a guaranty that the stock
holders wOuid not Intentionally ~oIec:
careless officials. Whv would n '.pec-
ulator" be delighted to enter the
banking business" under the gUaTG1-
" system? He l. not relieved from
Decuniary obligation nor is he relieved
from criminal liability. He would
have nothing to gain oy CaerIessncss. /
nor would the stoCkbo. doris have any
thing to gain by Indifference
Cause of Bank Failures.
The chief cause of bank failures Is
the making of excessive loans to d.
rectUrs or officials Of the bank This
IL the fruitful cause OF disastC ana
il has been impossible To secure Ie2is- !
ajion protecting banks from their own
officials and directors. Way? Because
here has been no mutual responsible
ity- When all banks become Liable |
for the deposits of each, the stockhCId
9rS VIII insist upon the enactment OF
4 law making II a criminal offensa for
a bank official 10 loan more than the
amount to one i,divTdJIal-
Al present We have law prohibiting
the lOaning of more than one-tentl OF
The capital and surplus 10 one person
Dr coTpora-iCI- but the law is ONLY di-
'ecJofE. Ot course. the COmptToll.r can
suspend bank # it violates The law
7ut the law i not enforced. because
he enforcement Of such a law would
hrcw the punishment upon innocent
and upon ne community. '
since the Suspension Of d bank iEfficts .
great loss UaOn stockholders and dis
urb> the business CT the city or town
n which the bank IS located
The law should make it criminal
,feuSe 10 loan more than the pre-
'Crl5ed amount TO one person and We
would probably he able 70 secure the
passage OF a law prohibiting market
speculation by bank officials
Inc Oklahoma plan i better 4
'ank recently failed in Oklahoma: {
within fOrty-eIght minutes after the
iojlce OF suspension. the officer in
'harge had authority to paw all de :,
'oSi1OTS- and then the banking board
10 collect the assets Of the /
,ank and 10 prosecute the officials