The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1908-09-27

ly 1t would rapidly increase in every fl
nancialS strfnsency. Two objections are
made to the conclusion that an enforced
ness and disaster in banking. One Is that
the government examinations would pre-
vent and the other IS, that it is an in
sumo that the. national bankers of this
country. IN view of their present high
character, would yield to the temptation
to recklessness presented by the sys-
tenn. answer to the first objection that
the government examinations do not now
prevent banlks.- from falling that it is
difficult for bank examiner to discov-
err the unwise recklessness and specula-
tive loans. and that often such loans are
made between the government 'examina-
tons, and then the evil is done and can
not be remedied by strict supervision.
Second. while-I fully concede the genera.
high character of the ebankers through
out this country. my point Is that the
opportunity to obtain deposits and invest
them on very little capital afforded by
the guaranty security, will attract into
the banking business men of no expert
ence and of speculative tendencies and
will distinctly lower the tone of the bank
ing business.
The Kansas Plan.
TT has been said by Mr.. Bryan that
the Republicans of Kansas by adopting
plank in favor of a kind of guaranty
of deposits, rebuke me for my opposi-
ton to the plan outlined in the Demo-
cratic platform. This is entirely inac-
curate. The Republicans of Kansas have
which banks. if they choose. may enter
into arrangement with other banks by
which they shall all be subject to an as
sessment to pay the loss to depositors in
any bank in the agreement. 1t is the
voluntary feature of the Kansas proposal
fthat makes the radical difference between
II and that OF the Democratic platform
II Is entirely conceivable that banks in
I III
servation of each other may profitably
and safely accept another guaranty Sc
curity of all for the benefit OF each,
especially when they can select their
partners.
Prevention Of Panics.
"One of the great merits claimed for
the enforced guaranty of deposits is that
It will prevent panics: 1t Is sufficient to
say that the present plan proposed cannot
prevent parffcs. A panic is not stayed
mately be forthcoming. 1t can only be
stayed by the production of the money
| itself. When a financial stringency is on,
| 1t Is the cash the man needs, and 70
say that he will get II next week certain
| ly does not assist him. No one who has
| heard that his bank was going to fail
will delay in Immediately applying for his
money merely because he is assured that
! at sometime i'm the future he will get
| it, Therefore, the system could not stay
| the panics unless the fund were large
enough to enable.the banks to pay all OF
| theirT dep6sitors at the time of the run
A tax is proportioned only to the loss
sustained after liquidation and payment
so that the funds would be utterly in
adequate to meet the demand for ready
money which would prevent a panic. The
| total deposits of the national banks are
| S. O0O 100000. One-half of one per cent
upon that, and this is much larger
percentage than proposed, would make a
| fund of SIS O9e.u01. The amount of money
| that was needed to stay the late panic IN
New York banks alone was many times
| this sum.
AIdrich-VreeIand Bill.
I'm other words, the cash needed to
stay a panic it is impossible to accumu.
| late in any other way except by such
emergency measure as provided In the
Adrich- Vreeland bill in which banks are
given an opportunity, upon proper Sc
curity, to issue $5oO.coO.0O0 to meet such
an emergency, and are prevented from
over-issuing by the imposition of heavy
| tax of 3 per cent The proposed guaranty
| plan also invites the cooperation OF
| state banks and proposes that they shall
| have an opportunity to come into the
same guaranty. The practical objections
and difficulties do not brighten Mr. Bryan