The Hartford republican. (Hartford, Ky.) 18??-1926, 1908-10-02
GUARANTEE OF
BANK DEPOSITS.
Secretary Root Discusses Dem
0cratic Financial Plank.
Burden Would not Only Fall On
Stockholders. But Up)n De-
p0sit0rs as Well.

The other proposition of the Demo-
cratic platform is to require all ma
tional banks 20 guarantee the pay
ment of deposits by all other national
bansk. This is another patent financial
nostrum, advertised TO catch the fancy
of the multitude and il should be
suppressed under the pure food law
until il is correctly labelled "a meas
ure TO compel legitimate business TO
bear the risks of speculation" 1t mig
we'll be called a measure 10 destroy the
national banking system, for who will
wish 10 invest his money IN bu-
siness where it is merely subject 70
the risks assumed by the men whom
he and his associates select to man.
age it but is subject also to the called
for the payment of an unlimited
amount of debts of indefinite number
Of persons over whom and whose obi
cations ne and his associates have no
control whatever?
A bank deposit is very simple bu-
siness transaction. The deposition in
effect Loans mis- money TO the bank,
which borrows it upon a promise to re-
pay it on the lenders order, with or
without stipulated interest. Banks
seldom fail 10 pay the debts tnus con-
tracted. Although the deposits are
ordinarily many times the capital,
loses are exceedingly small. The prin
cipal reason why this is so is. tnat
banersk are ordinarily men VINO nave
established good reputation in ine
community for honesty and business
sense. People ordinarily will not risk
the money by lending it TO men w1o
nave not these claims 20 confidence.
Under the law any one VINO can fur
nish S25,0 900 can start a bank, bur III
practice, as a rule, no one can start
a bank VINO cannot also furnish y
character when leads the community
to trust him and deposit their money
with MIN. ii, however. the sound and
honest banks of the country guarantee
the debts of every bank, well earned
reputation for honesty and business
judgement will no longer be necessary
as a part of the bankers capital IL
will no longer be necessary for the
community 10 consider whether ban
er is honest ornot. Any scalawag cal
start a bank and obtain deposits on
the credit of all the banks of the coun
try. Any one who wishes 10 use funds
in speculative enterprises can start
a bank invite deposits and thus bor-
row money on the credit of lie en-
tire banking capital of the United
States. With sucn opportunities, VINO
can doubt tnat the standard of cnarac-
ter of the bankers of the country
would deteriorate and the use of bank
ing funds for speculative enterprises
would increase and that the losses
which the honest bankers would be re
quired 10 make good would increase
correspondingly.
This burden will fall not merely up
on the stockholders of the banks, but
upon 'he depositors also Much bank
} ing capital would inevitably be driv-
en- out of the business and such as
remained would nave 10 make good it's
.Ooses by reducing Tie interest upon
nf ha L. N q
business, lie those of me mercnani,
/ the manufacturer and the farmer, de-
pend upon good management. The at
tempt 10 make all the profit Of
oodg management bear all the
losses of bad manaemenfg is.
step in the socialistic process which
would level all distinctions between
thrift, enterprise and sound judg
ment on the one rand and recll .essness
incapaciIy and failure.
/ Except for campaign purposes there
is no occasion for any sucn scheme.
/ the business men of rne country need
know with wrom they are deal
u no "AANh AA's E'hN' Dihh
/ for deposits and their intel
igence ard Knowledge Of at
fairs are amply sufficient for vneir
own protection in making Inc selec-
; ton. The wage earners of the coun-
try, the multitude of people of small
savings not familiar with business, SO
J far &C thav kva I'm placac "a. 40 ,bara
are savings banks, have practically per
feet safely for their deposits, nd over
i S,5OOOO0 of them are enjoying that
safety now with q good rae of in
terest For them if they prefer it and
for all VINO live in places which are
not accessible to savings banks, the