The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1908-08-28

BUSY today with NY crop; will be IN
| in day or two"
! IN Cleveland Ohio. a bank failed
! about the same time. and the papers
announced, Twelve hundred infu-l-
/ ated Italians 5tormed the closed doors
I OF the busted banking house Of Costan
! IE0nC3 on Orange street today The
police drove The crowd hack
/ An objection is sometimes made TO
/ the guaranty law that A new hank
! would start up across the street. ana.
! heInE able to promise its depositor-
/ absolute security through the guar
anty law. could draw the deposits
/ away from conSeTvativCly managed
/ banks, by offering higher rate of in
/ terest than the latter could pay. This
/ objection Is urged as if it were an IN
| ansEerabic one. But let Us sec how
/ easily II can he met Since the Ian
/ makes all Of the banks liable for the
! Obligations of each bank. the Law
/ should prohibit any abuse Of this So
/ curEty by any bank and in Oklahoma
( the banking board has already fixed
/ the rate Of interest that can be paid
I 10 dopOstjOrs- According TO the rules
( Of the banking board. no bank is per
mittCd to pay more than three per
cent on short time deposits or moro
/ than four per cent on time deposits
running for six months Or more
| Big Banks and Little Banks
1t has also been urged as an ObjeC-
ton that under the guaranty system a
big hank would have no advantage
over little bank. Even if this argU-
ment were sound. it could not weigh
against the advantages OF the system.
for banks are made for the people and
not the people for the banks While
there are advantages in having big
adv c1Tfn
cient to justify the jeopardizing of the
depoSitor or Of the business interests
i-Of a community.
But, as matter of fact the big
bank would still have several advan-
tageS over the small one In the first
place, it could make larger loans than
the small bank. For instance. bank
with S1,0O0,000 capital and surplus
could as at present, loan 100000 to
one person, while a bank with $1,000
capital and surplus could only loan
$4,000 to one person. This advan-
tage would in itself draw 20 the large
bank the large deposits and men doing
business upon a large scale, for de-
pOSitS follow accommodations.
Then, too, there is a certain bust
ness advantage in depOsiting with a
big bank 1t is worth something to be
able to refer to a big bank when ones
financial standing is being investigat-
ed. and worth still more 20 have the
advice of a man of large business ex-
peTience when business enterprises
are being considered
Besides these there is a social ad-
vantage in being on good terms with
the men who are prominent in the
banking world. Surely the big banks
prestige will be worth enough to II
under the guaranty system: 1t should
not begTudge the smaller banks the
advantage which the guaranty of de
posts viii bring to them.
Big Banks Need Guaranty.
I cannot pass from this subject |
without referring to the fact that the |
big banks need the guaranty as we'll |
as the little ones. for big banks fail 1
as well as small banks. and the bigger |
the bank the greater the calamity 10 4
the community when IT fail No bank /
IS so big as TO be absolutely beyond /
danger and a community needs pro- 1
lection against the big banks failure /
oven moro than against the failure Of /
the small banks
II has sometimes been objected that |
the guaranty system would bring into /
the banking business lower class OF /
ren- and reduce the average in char /
aCtcr- on the contrary. the guaranty /
Of deposits. | submit would if il made /
any difference in this respect. bring |
into the banking business q better /
class OF men and raise. if that IS pos
SibiC. the average - character II IL !
not 10 . mans disCrs7jt that hc Is not /
willing that one Of 3 fellow men
sSCUld lose money ou' his account Is 1
il not mark OF character tlat a man
should he careful Of his Eood name /
and cOu5iderate Of ths esteem of his /
fellows? At presontE d successful |
farmer CT business mag may be Undue /
ed 70 take stock in Z bank 1t may
be that his name Il desired to give
standing and credit o! The bank. but
such a man Is constaatlr haunted by /
the fear that a hank yFiciaI NAV he
guilty of criminal coHdUC: which will /.
bring Inc bank into iHsoivoncy. Il is
even possible that tie bank = assets
may be entir$y dizsipated. and that
the honest citizen. who has become 4
stakeholder may either Ne compelled /
to go beyond his legal liability or meet
the bitter criticism Of the depOsitors
who have suffered ny the failure.
Would il not be worth something to
the stakeholder. in pc~re Of mind 10
know that the maXiT I'M Of his less
would he the value ~ his stock and
the loo per cent LIABILITY End that N =
denosItOT could lose anythiug2 7 am
convinced that the guaranty of deDOs-
its would not lead 10 degeneration IN
the personnel of tire bankers
Advantage to Banks.
10 justify Law guaranteeing de
pOsitoTS- it l. not necessary to show
that the advantage to the bankers
would amount TO more than the tax
The examination Of the banks would
to be made a. the expense Of
the banks. even If il were certain that
the examination was of no pocuniaTy |
aoFant age to the banks The law
would continue 10 require certain
amount of reserve TO he kept on hand.
even If il we're certain that such a law
brought 10 peCuniary advantage to the
bank: and SO the banks ought to be
10 insure their depOsitOrs
against loss. even If II could not ne
shown that such insurance would
oTIng COmDensatins advantage 20