Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1908-10-01
BANKERS OPPOSE
GUARANTY SCHEME
American Bankers Federal Leg
is]ative Committee Takes De-
cided Stand in Opposition
is MISLEADING
Committee Holds That Guaranty Bank
Deposits Law Would Work TO pstri.
ment Of Depositins Public as Well. as
70 the 1anks-cIo.ins Session. Ar.
Held Today.

7eIo looay.
Denver, Oct. 1.-The closing sessions
of the American Bankers association
today. were replete with incidents full
of interest. Besides the election Of of
ficers, and the winding up OF the bus.
mess Of the convention, resolutions that
may have far-reaching effect. were
considered.
The question OF guaranteeing bank
deposits was brought squarely before
the association in the report Of the
federal Legislative committee, which
takes a decided stand in opposition to
such action by either the federal or
state government. The report says
that guarantee fund would be
function wholly outside any purpose
Tor which the state or federal govern
ments are organized; that the assun.
ing of this trusteeship would be mis-
leading to the general public, as it
is not guaranteed by either state or
federal government; that such law
would work to the detriment, not only
OF the banks, but to the depositing
public as we'll. The report continues .t
"Depositors Of a bank are guaran-
teed primarily by the character Of the
assets in which the depositors' money
is invested, margined and fortified by
the banks capital and surplus If q
banks assets, that is to say, It's Invest
ments, are good, IL its credits have
been wisely and conservatively ex-
tended. depositors are amply protected.
and need no other guarantee. Why
should not a banks assets be guar
anteed? Why not guarantee payment
to the banks Of receivables Of their
various cHental? This would guaran-
tee deposits. Both propositions are
alike illogical and absurd.
Deposits In bank are safe In Just
the proportion that its assets are good.
We should discourage unwise extension
of credit, rather than open the way for
reckless banking, which would seem
to be the Inevitable result Of the pro-
plans will do away with panics. Are
they not more likely to prove the moth
er Of panics? In business paralysis,
born Of the unreasoning fear Of the
public, in such conditions, will depos-
itors refrain from withdrawing their
funds? VIII they not, rather, withdraw
them at once, because Of an unknown
danger resulting from each bank be-
ing compelled to guarantee the loss in
10000 banks? To those who have had
the gruelling experience Of several
panics, there is but one answer to this
question, that no law could be spread
on the statute books more fraught with
mischief, than a law for the enforced
guarantee Of bank deposits.
Let congress provide means where-
by perfectly solvent banks with good
assets can obtain currency with the
same facility as banks in other great
commercial nations, and It Will have.
gone far toward the prevention of pan-s
ics.''
sion shows some progress was made
before congress. While it does not
wholly approve t1e Aldriol- vreeland
measure it states the new law DIS in the
direction of progress. No bill was sug-
gested in the report but the co1nnlds-
sion declared that the bill it proposed
to the last session was, in its opinion
the best bill that could be submitted.
The report was unanimously adopted.
Opposition is Strong.
"A resolution was adopted by the COM
vention that 'ttllis association Is unal-
teraIbly opposed to any arbitrary plan
looking to the mutual guaranty OF de-
posits, either bN the state or nation.
for the following reasons:
"Unsourid In principle; inpracticable
and misleading, and revolutionary in
character; subversive to sound econo-
mics, it will lower the standard OF QUIZ
present banking system. It Is produce
tive OF and encourages bad banldng:l
and unjustly weakens the strong. and
unfairly strengthens the weak banks;
discredits honesty, abidty and conser-
vatism. The loss suffered by one bank
jeopardizes aiM banks. The banks must
eventually pay the tax. The plan Will
cause and not avert pandcs."