The Washington herald., 1908-08-27
me Deposit Guarantee Issue.

The Deposit Guarantee Issue
Are not AIr. Taft and his friends making
an unnecessary possibly a serious. blum
der II so strongly opposing the proposal
to guarantee the deposits Of national
5anks7 There is nothing in the scheme
inherently obnoxious 70 Republican prin-
ciples; in fact, It Is quite in accord with
the Republican policy Of strengthening
and Increasing the efficiency Of the ns-
tiouaI banking system. On the other
hand. as We pointed out the other day.
IL marks a departure from the old-fash-
ioned Democratic opposition 10 national
banks. Normally. we might expect the
Republican party 10 accept a project 70
extend the usefulness and. increase the
safety Of q banking system 70 which il
has always pointed with pride" But
as the proposition has been brought for
ward BY the other side. il is seized upon
as another of-3Ir. Bryan's wild and in
practicable" ideas. that must be fought
at any cost as visionary. dangerous, and
sociaHstic.
On the merits of the proposal financial
/ authorities differ, as they do upon nearly
every other phase OF the banking CUES
ton. However. some very respectable
/ students Of finance see nothing impossible
I or dangerous in the guarantee Of depos-
[ it's L VIII be remembered that Mr. Fow-
f Ier. chairman oS the House Committee on
I Banking and Currency. incorporated fl
his bill for the reform OF the national
/ currency a scheme for the guarantee Of
national bank deposits that was in no way
! inpracrcabIe OF visionary. Mr.. Fowler IS
not a dreamer or a socialist. but one
1 OF the ablest and besr-ilformed students
/ Of finance in public life. Il Mr. Taft
were looking about for a Secretary Of
the Treasury really competent 70 fl that
/ once he could md no better than Nr-
/ Fowler. yet the New Jersey statesman
saw nothing perilous or impossible II the
guarantee OF bank deposits. His theory
was that all banking credits, whether
note issues OF deposits. should Be placed
on an equal plane Of ssfery-a theory that
sounds Ike common sense. as vel as
/ sound banking. His bill embodied a we'll
/ conceived plan Of currency reform. though
/ somewhat n advance OF Congressional
as vel as Of public sentiment and was
strongly supported. deposit guarantee and
all. in quarters wholly free from any sus-
p.cion OF taint with so-caIIed Organism
.--4==-.-7-v- n 0--s-v-7zs
Postmaster General Meyer offers the
same objections 20 the Bryan deposit
guarantee scheme as were brought for.
ward By opponents Of Nj Fowler-s meas.
u-e. NJ Meyer fears that the banks
would be obligated 10 pay u---~-z
\ losses ard q take unk-o=- risks
4 under a guarantee system The losses
70 national bank depcsIt0rs. however
+ are accurately known for a long series
OF years. and the risk can be closely com
puted. II amounts 10 but a minute f-ac
ton OF the total volume OF deposits
fraction SO small. IL truth, that its LITTLE
ness has been urged as an excellent rea
son for not guaranteeing deposits az al
it being argued that the guarantee Is un
necessary in view OF the tnconsi5erabf
total loss 10 deposito-s from rational banl
failures M-. Meyer further objects tha
honest banks would have 70 pay n
debts Of disao-estly managed banks
: That would undoubtedly occur; yet il ma,
be pIauzlbIy argued that the entire bank
ing community ought 20 bear the Iosse
p due 20 dishonest banking. rather tha,
the individual dspositors- # that we-
p the rule. we may be sure that the nariona
hanks. comparatively organized as the
would be under q guarantee deposit sys
p TEN. would see 70 IL that dishonest bank
. ing was reduced 10 minimum Il j
r. by no means infrequent in the baakin
Z world -hst honestly managed banks com
4, 10 the rescue Of one that has been badl
p or dishonesty managed in order 10 pre-
e vent losses 10 depositors by the faIur
p Of the bank The guarantee OF deposit
e would insure The safety Of all deposit
e as the rule. rather than the exception. an
BY a system that would be eveatuaH
. reduced 70 scientific perfection Instea
e Of placing a premium on dishonesty. n
guarantee OF deposits. by making it Z
the interest q the banks 10 6iscounts
nance risky and unscrupulous bankiu
: operations. would tend to promote homes
banking
Of course. f guaranteeing deposits
socialism as our sapient Postmaster Ger
r eraI would have Us believe let's drop
p at once. What We DO see. however.
e thai the Republican campaigners hav
b picked Up a live wire in this depos
e guarantee proposal. Why they shoul
p have singled II out for attack. when the
e might better have left IL alone. need
e some more lucid and convincing explain,
+ ton than Mr.. Meyer has been able {
I contrive-
The Norfolk Landmark says M Roost
d velt's admitted reason for taking thz
z -~0~--a= f-7~-- A-7-- ss -e-a 49,