The Stark County Democrat. [volume] (Canton, Ohio) 1833-1912, 1908-09-03

| ehu thS ihbuIdHCe Oi uepOSllOfS is
growing in popularity more rapidly
than any other form of insurance
and, may add, It yields the largest
return on the investment.
The chief cause of bank failures is
the making of excessive loans to di-
| rectors or officials of the bank. This
is the fruitful cause of disaster and
1t has been impossible to secure leg
islation protecting banks from their
own officials and directors. Why?
Because there has been no mutual
| responsibility. When all banks be-
come liable for the deposits OF each,
the stockholders will insist upon the
enactment of a law making 1t a
| criminal offense for bank official to
loan more than the prescribed amount
to one individual. At present we
have law prohibiting the loaning
of more than one-tenth of the capi-
tai and surplus to one person or cor
poration, but the law is only direc-
tory. Of course, the comptroller can
suspend bank if it violates the law,
but the law is not enforced, because
the enforcement of such law would
throw the punishment upon innocent
stockholders and upon the commun-
ity, since the suspension Of bank
inflicts great loss upon stockhold-
ers and disturbs the business of the
city or town in which the bank is
located.
The law should make ii criminal
offense to loan more than the pre-
scribed amount to one person and we
would probably be able to secure the
passage of law prohibiting market
peculation by bank officials.
The Oklahoma plan is better. A
bank recently failed in Oklahoma;
within forty-eight minutes after the
notice of suspension, the officer in
charge had authority to pay all de-
positors, and then the banking board
proceeded to collect the assets of the
bank and to prosecute the officials
criminally. When the business was
closed up, the stockholders passed a
resolution thanking the state board
for its prompt action, the action of
the board being protection to the
stockholders, as well as to the de-
positors and to the public generally.
1t has sometimes been objected that
the guaranty system would bring in
to the banking business a lower
class of men and reduce the average
in character. On the contrary, the
guaranty of deposits, ! submit, would,
If ii made any difference in this re-
spect, bring into the banking bust
ness better class of men and raise,
if that is possible, the average of
character. 1t is not to a mans dis
hot ha &c
one of his fellow men should lose
money on his account. Is it not a
mark of character that a man should
be careful of his good name and con-
siderate of the esteem of his fellows?
At present a successful farmer or
business man may be induced to take
stock in bank. 1t may be that his
name is desired to give standing and
credit to the bank, but such a man
is constantly haunted by the fear
that bank official may be guilty of
criminal conduct which will bring
the bank into insolvency. 1t is even
possible that the banks assets NAV
be entirely dissipated, and that the
honest citizen, who has become a
stockholder, may either be compelled
to go beyond his legal liability or
meet the bitter criticism of the de-
positors who have suffered by the
failure. Would it not be worth
something to the stockholder, in
peace of mind, to know that the
maximum of his loss would be the
value of his stock and the 100 per
cent liability, and that no depositor
could lose anything? l am convinc-
ed that the guaranty of deposits
would not lead to degeneration in
the personnel of the bankers.
To justify law guaranteeing de-
positors, it is not necessary to show
that the advantage to the bankers
would amount to more than the tax.
The examination of the banks would
continue to be made at the expense
of the banks, even if it were certain
that the examination was of no pc
cuniary advantage to the banks. The
law would continue to require a GER
tain amount of reserve to be kept on
hand, even If 1t were certain that
such a law brought no pecuniary
gain to the bank; and so the banks
ought to be compelled to insure their
depositors against loss, even if 1t
could not be shown that such in
surance would bring a compensating
advantage to the bank. The bank
charter has value; If ii were not
valuable the bank would not be or
ganized. The bank charter is a gift
from the people through the law,
and the people who authorize the es-
tablishment of a bank have a right
to demand, In return, that the bank
shall keep the pledge which 1t gives
when ii invites deposits, and make
good its promises of security to those
who deal with it.
The refusal of the banks to permit
the passage of law granting secur-
ity to depositors is responsible for the
growth of the sentiment in favor of
the government savings bank, and
the sentiment will continue to grow
unless something is done to satisfy
the demands of the people upon this
subject.
The republican party proposes the
establishment of a postal savings
bank system; the democratic party
prefers the guaranteed bank because
1t is better for the depositor and bet
ter for the banker-it gives the de-
positor the security which he needs
and yet leaves the banking business
in the hands of the banks. But the
damOprafio nIatforoa daolarae Co. asa