Little Falls herald. [volume] (Little Falls, Morrison County, Minn.) 1889-1950, 1908-03-20
Il


be made for the benefit Of all the peo-
pie and not for the benefit of few
Of the people. While / can admire
the interest which you feel in the wild
oWs and orphans who are stockhold-
ers, I must remind you that the wild
ows and orphans who deposit money
in banks are also entitled to consid-
GRAFTON. It is supremely selfish in you
to forget the interests Of the larger
number of depositors who make bank
ing profitable. Banking would not
be very advantageous If you only
loaned the money of the stockholders
The real profit of banking comes from
the loan of depositors' money and it
is a little heartless in you to look at
the question entirely from the stand.
point of those who get the benefit of
the deposits.
Your second argument is, that the
guarantee of deposits would lead to
reckless banking and that the BUSH
ness communities would protest
against the guarantee system on the
ground that it would make all banks
insecure and drive the better class Of
people out of the banking business.
THAT, of course, Is a prophecy, and
q prophecy is more difficult to answer
than an argument based upon history.
Insofar as experience teaches any
thing, it teaches just the contrary. A
guarantee law has been passed in
Oklahoma. and the result is that tho
bankers Of southern Kansas have
Joined with the depositors in asking
for a special session Of the legislature
in Kansas to consider a guarantee sys-
tenn, and they have done so because
they fear that deposits will be with.
drawn from Kansas and carried into
Oklahoma .eeen Instead of driving men
out Of the banking BUSINESS. the Okla,
homa law has led number of ma
.tional bankers to take steps toward
changing their banks into state banks
In order to take advantage of the
state law, in case national banks are
not allowed to enter the system.
when tried to secure the passage
Of q bill in Nebraska. providing q
guarantee fund for state banks. it
was opposed by the national banks on
the ground that people would remove
their deposits from the national banks
to the state banks, If the state banks
were made absolutely secure; and it
is to avoid injustice to either class
Of banks, that I have urged that ma.
tional banks should be permitted to
take advantage of guarantee systems
established in the states and that
state banks should be permitted to
take advantage of any guarantee sys-
tenn established by congress-
1.-The guarantee of deposits will not
produce recklessness in management.
You are selected by the stockholders.
not by the depositors. You will en-
deavor to manage your bank in the
interest of the stockholders, and your
argument shows that you consider
their interests paramount Under a
system of banks, you would
still be responsible to your stockhold-
ers. They would lose all that they have
and be subjected to the 100 per cent !
liability in addition, before other
banks could lose anything on account
OF your banks failure. Would this |
not be sufficient to make you careful? |
do you think we could improve the |
character of our bankers by repeating
all laws providing for regulation and |
inspection? If not, why do you think
1t would lower the character of bank |
officials to increase the security Of de-
positors?
"The fact is, that the country is suf-
fering to-day from lack of confidence
In banks more than from any other
cause. The money can not be drawn I,
from hiding and boarding unless the !
depositors are assured Of the safety |
Of the banks. The amount Of the tax
on each bank would be little compared
With the benefit which it would re-
ceive from its shore of the increased
deposits. and as for making banks un-
safe, the guarantee system will insure
safer banking.
NEARLY every bank failure Is due
TO the appropriation of the money by
he directors or officers.
"Why have we not been able to
secure better regulation of banks?
The answer is simple. The bad banks
don't want any regulation and the
good banks prefer to make business
advantage out of the recklessness of
other banks. When banks become mu-
tually responsible for each others
1epositors, it will be easier to secure
he proper regulation of the banks.
1T all depends upon the point Of
view. II legislation Is to have for it's
object the welfare Of the whole peo-
pie. then the guaranteed bank ought
70 come and come to stay. If, how.
ever, the legislation is to have for its
object the securing of privileges to
! few of the community at the ex.
pense Of the rest Of the community,
your argument is sound.
II believe that it would be perfectly
,afe for the federal government toI