The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1908-10-01
Comes Out Squarely Against
Guarantee of Deposits.
Why NOT THE ASSETS?
AS Well as the Deposits Says the
Report.
Scheme Is Likely to Prove the
Mother of Panics.

]
guaranteeing bank deposits was
brought squareiy before the annual
! convention of the American Bankers
association at its afternoon session to-
| day in report of the associations
! federal legislative committee, which
takes decided stand in opposition to
such action by either the federal or the
! state governments, The report in part
is as follows:
| Your committee is opposed to the
guaranteeing of deposits by either
state or federal governments. or the
assuming of trusteeship by either, of
a guarantee fund, believing that it
would be a function wholly outside of
any purpose for which state or federal
governments were organized and for
the further fact that the assuming of
a trusteeship would be misleading to
the general public, as it is not guar
antee by either state or. federal gov
ernment; and that such a law would
work to the detriment. not only of the
banks, but to the depositing public as
we'll
| IF one class of bank creditors is to
| be insured against the usual mischance
| of business why not all classes: and
| where is the justice of levying de-
poSltor'S loss, for which he is not re-
sponsible upon other banks, who are
! also not responsible for his loss and
who have no voice whatever in the
selection of where he shall keep his
account?
| "Depositors of bank are guaran-
teed primarily by the character of the
assets in which the depositor's money
is invested, margined and fortified by
the banks capital and surplus. If
banks assets, that is to say, its invest
ments are good, if its credits have
! been wisely and conservatively extend
ed, depositors are amply protected and
need no other guarantee. Why should
not the banks assets be guaranteed;
why not guarantee payment to the
| banks of the receivab bles of their vari-
Gus clientele? This would guarantee
! deposits. Both propositions are alike
logical and alike absurd.
Means Recl1Isss Ranking.
| Deposits in a bank are safe in just
the proportion that its assets are good.
/ We should discourage unwise extern
| sion of credit rather than open the
way for reckless banking, which would
| seem to be the inevitable result of the
proposed schemes.
1--WE are told that these plans will
| do away with panics. Are they not
more likely to prove the mother of
panics? A panic is business paralysis,
born of unreaSoning fear on the part
of the public. In such conditions will
depositors refrain from Withdrawing
| their funds? Will they not rather
withdraw them at once because of the
unknown danger resulting from each
bank being compelled to guarantee the
| losses in 10000 other banks? To
those who have had the gruelling ex-
perience of several panics there is but
/ one answer to this question and no law
could be spread upon the statute books
| more fraught with mischief than law
| for forced guarantee of bank deposits.
Let congress provide a means
whereby perfectly solvent banks with
Unnh a n oh curry 1,..x-
with the same facility as banks in 9TH
er great commercial nations and they
will have gone far toward the preven-
ton of panics.''
Section of Bank Employees.
The report of the committee on
amendments to the constitution and
bylaws was read and adopted.
Among the amendments to the con-
stitution adopted was one for the or
ganization of a section of the American
Bankers association to be known as
the American Institute Of Banking Sec
tion with one representative on the ex-
ecutive council The new section is
made up of banking employees.
George NJ. Reynolds. of Chicago, in
vited the association to meet in Chi
cago next year and the invitation was
accepted. Los Angeles extended an
invitation to the association for 1910.
The report of the currency commits
sion shows that some progress was
not wholly approve of the Aldrich-
Vreeland measure. it states that the
new law is in the direction of prog
ress.
No bill was suggested in the report
but the commission declared that the
bill it proposed to the last session was
in its opinion, the best bill that could
be proposed.
Former Governor Myron T. Herrick
of Ohio, read the report of the commits
sion and made a brief speech on the
subject. There was some discussion,
but no opposition developed to the re-
port which was unanimously adopted
and the commission was continued.
The committee on federal legisla-
ton submitted the following resolu-
ton:
Resolved, that the American Bank
ers' association is unalterably opposed
to any arbitrary plan looking to the
mutual guaranty of deposits either by
reasons:
lit is a function outside of state
or national government.
"2-It is unsound in principle.
'3-It is impractical and mislead
'4-It is revolutionary in character.
'5-It is subversive to sound econ
omies.
"6-It will lower the standard of
our present banking system.
BE productive OF anu elicOEr-
age bad banking.
Sit unjustly weakens the strong
and unfairly strengthens the weak
banks.
'9-It discredits honest liability
and conservatism.
The federal legislative committee
also reported adversely on the pro-
posed establishment of postal savings
banks. saying mo bill has been pre-
sented which would really prove BEN