Belding banner. (Belding, Mich.) 1889-1918, 1908-09-17
VIEWS or AN EXPERT.
Shall Banks Be Made Liable Tor
One Another's Debts?
Recognized Authority on Financial
Questions Discusses Practical
Bearings of Proposed Guar
antee Plan.
(By George z. Roberts, former ID
rector OF the Mint.)

(By George e. Roberts, former d.
rector OF the Mint
The proposal to require the banks OF
the country to guarantee each others
deposits owes its present strength TO
the financial disturbance OF last rail-.
1t is urged as a means OF preventing
panics, and there Is no disagreement
about the desirability OF accomplish
ing that purpose. Most Of us agree
that repetition Of the conditions
which existed last fall should be made
impossible, but this is by no means the
only way to do it, or the best way
For years the advocates Of compre-
hensive currency reform have pointed
out that with $14.OOO.OOO,OO0 of bank
deposits In the country and only about
$4,000. 100000 Of money all told In the
country, both In the banks and out,
there should be some method provided
by which, on the basis of good assets,
the supply OF lawful currency could be
readily increased to meet exceptional
demands, whether such demands were
due to seasons OF unusual business ac-
tivity or to alarm among depositors.
Their foresight and arguments did not
avail. but they are hardly to be swept
of their feet now by impatient zeal for
this new. and, as they regard 1t, III
considered scheme. They stand for a
complete and scientific trea tment OF
the subject.
The guaranty Of deposits is a crude
not recognize or attempt to cure the
defects In our banking and currency
systems, but aims only at persuading
depositors not to draw their deposits.
The losses to depositors by the failure
II national banks has become an insig-
nificant percentage, and is growing less
every year, as a result of natural. evo-
lutionary progress In banking. The
standards are being constantly raised,
and the efficiency of official inspection
and supervision constantly improved
The true line Of development Is not by
any revolutionary policy, but by hold
ing individual bankers TO yet
stricter account, and at the same time
enabling every properly conducted
bank to readily obtain a supply of cur
rency TO meet all demands upon 1t.
The fundamental weakness In our
currency system is In the fact that II Is
not readily responsive to the needs Of
the country. The legitimate demand
for money varies from year to year,
and from season to season In the same
year. 1t Is a familiar fact that there
is great deal more business To be
handled from September LIST 10 Decem-
Der 3lst each year than I'm any other
four months OF the year, but there Is
no more money In the country unless
gold is imported for the purpose.
Would Lead tn Reckless Banking.
AS a remedial measure the guaranty
OF bank deposits is not only inadequate.
but ii is worse than inadequate, for IL
proposes TO overturn the principle Of
individual responsibility by means of
which the banking business has been
raised to its present high standards.
and upon which all individual and So
cial progress is based.
The proposal contemplates that the
public shall be relieved entirely from
the exercise of judgment and dis
elimination in the choice OF banks, and
while IL is highly desirable that all
banks shall be made safe, to the end
that even the most ignorant and con-