Los Angeles herald., 1908-10-06
BANK GUARANTY

II, sisting in their ridiculous at
~ tempt to scare voters by making
the statement that guaranty of bank
experiment. On the contrary, it is a
conservative, thoroughly tested and
tried and ever-found-wanting way of
giving the right kind of protection"
to wage earners and men with limited
means or small capital. Republicans
would not be opposed to the plan If the
interests which rule the party had not
ordered them to oppose IL.
The Herald has already shown, by
reproducing extracts from Republican
contemporaries and by furnishing
other indisputable proofs, that \Repub-
licans offered no objection to the plan
now championed, by Mr.. Bryan until
some of their heavier campaign con-
tributors had given orders to repudiate
bank guaranty.
The proposition to provide protection
for bank depositors is not new. It has
been advocated by many well-informed
writer's on financial subjects in the
United States; not only (as we have
shown by Republican newspapers,
among them Los Angeles Times, but
by many practical bakers.
The discussion is not merely aca-
demic. It is idle or foolish to say
bank guaranty won't work" 1t
works. It is successful. Deposit in
surance is in operation in one state,
and is likely to be adopted by others.
During the Republican panic most of
our $4,000 banks, including practically
all of those in the large cities, stimuli
taneously went out of business without
closing their doors or going into liqui-
dation. They abdicated their banking
functions without surrendering their
charters. While the immediate result
of the financial coup was to save the
country from much greater disaster,
the precedent established was arbi-
trary, indeed, revolutionary. In the
words of an expert financial critic:
IF hereafter, when public confidence
falters and bad financial weather
threatens, our bankers, encouraged to
do so by their recent experience, may
run to cover in a similar manner, it
may prove that the nations escape
from severer panic was purchased at
too great a cost. The only ground on
which the action of the bankers dur
ing the crisis can be justified is that
they were attempting to do business
under an antiquated banking system
which they found to be UNWORK-
ABLE UNDER TEST, and that they
now admit its complete breakdown and
are ready to join the rest of the COM
munity in measures to produce a sat
isfactory and enduring result. It is
proposed that congress by suitable leg
islation, to be administered by the
comptroller of the currency advised by
the secretary of the treasury, shall
provide for an assessment to be levied
and collected upon the capital stock
Of all national banks equal to a speci-
fed percentage upon the average de-
posits of each bank for the preceding
year. The proceeds of the assessments
will constitute a national bank de-
posit guaranty fund, to be held in the
custody of the treasurer of the United
States and used for the purposes of
the law. From this fund, whenever
national bank fails, it's depositors will
be paid in full as soon as their claims
can be duly verified"
This plan, or a similar plan along
lines which will produce the same re-
suits, is what is indicated in the pledge
of the national Democracy to '1egis-
latiop under which the national banks
shall be required to establish a guar
anty fund for the prompt payment of
the depositors of any insolvent national
bank under an equitable system which
shall be available to all state bank
ing institutions wishing to use it."