Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1908-10-26
Riddles Mr.. Bryan's Guar
antee Of Banking Idea.
Banker Must Guarantee b|indIy
Speculation Would Increase
Borrower and Deposition Would
Foot the Bill.

Chicago, Oct. 25.--The following arti-
Gle on "Fallacies Of Guarantee Bank
ing" has been prepared by Hon 1heo-
dare Burton, member of the Monetary
Commission of the United states
chairman of the commission on rivers
and harbors Of the United States House
OF Representatives:
The first and perhaps the foremost
objection to be urged against Mr.. Bry-
ans proposition to guarantee the de-
deposits in the national banks is that
1t is wrong in principle.
1t says to the man who is prudent
skilful and honest in his banking bus
mess and methods 1--WE will force you,
in the most important feature Of bank
ing to become a partner with many
others whom you do not know ana VINO
are widely scattered.
1t imposes regulation on bankers
which would be absolutely fatal t."
success in any and every other llnc CT
business. 1t would ignore and obliter-
ate the difference between those who
are worthy to be successful, those VINO
are to be trusted, and those who are
not entirely to be trusted and not ful-
ly worthy to succeed
In addition to this it would violate
that cardinal principle Of all business
operations that authority must ac-
company responsibility This is big
consideration and can hardly be too
strongly emphasized in this particular
connection. The substantial. honest
and conservative banker would, under
Mr.. Bryan's scheme, have no superVl-
sion whatever over the other bankers
as to their methods of conducting their
business, but would at the same time
be compelled to stand as guarantor Tor
them for the dishonest, the reckless.
and the laundering ones as well as for
all others.
And not only is the solid banker made
responsible unde" this scheme for any
mistakes or the results of reckieSSneSS
Or dishonesty on the part of any 9TH
er bankers, and not only is he utterly
without authority over them, but he
is also powerless to fortify himself
with any definite information as to how
other bankers are conducting their bus
mess; be cannot demand to see their
books or to be informed Of the safety
with which their loans are being made.
ItISnC III tnlS connection IL ~
said that there is nothing so fatal to
successful business as an indefinite
and an uncertain risk. In the life in
surauce business the companies can.
BY means of dependable mortuary ia
bles. Judge correctly of the avera ge
length of life of those whom they IN
sure.
In the fire insurance business there
H. not quite the same degree of GER
tainty or of uniformity in the amount
of damage by conhag ration-in other
words, the underlined risk in the field
OF fire insurance is greater. And this
uncertainty compels them to charge a
considerably higher rate than they
would otherwise have to charge.
To put it still differently, this uncer-
tanty costs money; ii is expensive: 1t
must be provided for or else the busl-
ness institutions assuming such rish
must come to disaster Insurance
against loss by theft has alos been
tried but the companies which have
undertaken This class of risks h3vo
been almost uniformly unsuccessful. In
n word, 1t has been aSccrtained by
practical experience that insuranc.
against theft is outside the line of
practical and rational assurance.
Now insurance against loss l'y banks
is far more impracticable and objec-
tionable than insurance against theft
because il involves many more ele-
ments of uncertainty. No man car
even remotely approximate what will
be lost by the laundering of well in
tending bankers or by the dishonesty
IF INSCRIPTIONS ones.
The variety of mistakes which cal,
be made by the laundering. careless
and incapable banker, who really in
tends To be honest is perhaps only CX-
ceeded by the variety of ways in Which
the interruptions banker can lnani,'u-
late the funds intrusted to his care t'
the disaster of his depositorS. or mn
der the operation of the plan plopuseI
Dy Mr. Bryan. to the disaster of :ht
conservative and honest bankers VIII,
are made liable to those depostors
The inevitable result OF making al
banks or bankers responsible for the
losses of others over whom they haV.
no control would be an Increase IN the
rate of interest which the banker must
charge on loans and a diminished rate
of interest to the depositor. The con
Servative banker would have to sa.
to the borrower:
"A new risk has been injected into
my business. I must secure myself
against it. And the only way by which
can do this is by charging higher
rate of interest to those whom I &C.
commodate with loans
And to the man who comes to IFS
bank with money for deposit he would