Omaha daily bee., 1908-10-02
GUARANTEE SCHEME FAILS
James S. Sherman Tells How It
Worked in New York.
LAW PASSED EIGHTY YEARS AGO
Ninety Banks Came In Under safety
Fund Act ana Eleven Failures
Created an Enormous
Deficit.

PEORIA. ILL.,, Oct. 1.--James s. Sherman,
republican candidate for vice president, in
a speech here tonight:
Mr.. Bryan in accepting the third nomi-
nation for the presidency sails attention
to the fact that he has twice been de-
feated as a candidate for the same office.
Mr.. Bryan twice suffered defeat because
the American people believe that the
declarations would bring commercial
disaster to our people Many of these
vagaries are omitted from the platform
now; omitted to give place to new and
hardly less startling and dangerous provi-
sons promises, 1t Is proposed that by a
defined method the Individual deposits In
all banks of the country be guaranteed.
with great earnestness Mr.. Bryan en-
deavors to convince the average men Of
the wisdom Of this proposal.
Demacrts have at various times held
mastery of all departments of the govern
ment OF New York state, which Is ad-
mittedly the chief banking state OF the
union. Yet for more than half century
no partisan leader, no financier has ad-
vocated the guarantee of bank deposits.
This has not been because the policy was
unknown. New York had an experiment
which was costly and disastrous.
In 1879 a law was passed creating a
fund for the benefit of the creditors OF
certain manufacturing corporations. and
this in popular phrase was styled safety
fund. The law drew no distinction be-
tween notes and other obligations and the
of its a Vocates. Depos Is were cover q
by the guarantee as well as notes. The
legislature after some years discovered
that deposits are an affair between a
tank and it's customer while the or u
lsting medium affects every b 0dy who
handles money or wages or traffic OF any
sort,
Big DehcIt Created.
Ninety banks paid taxes into the safety
! fund and elevent drew from II 10 cover
their losses. The deficits I'm the fund
compelled repeated taxes on the btnlxe,
while the state issued bonds to anticipate
| collections delayed. TIE ghost of the guar
/ antee was not laid until 1866. when the
| accounts were closed. Up to lS45 the total
| losses which became claims against the
safety fund were s2549.OO. while the taxes
/ had produced only 81 5C2 coo. The surviving
/ the deficit from the resources Of their own
| stoc khOlders.
The full burden OF the guarantee wa
| $3 10000. The grand balance sheet shows
| that prior to lS4S the creditors of the
| banks lost nearly 25 per cent OF Their
| claims which the state made good until the
| surviving could pay. The result reached
which attached to all banks pervaded gen
/ eral business. The moral story was hardly
| less than the money ruined.
/ Yet, Mir. Bryan urges that the govern.
| ment requires securitr for public fund,
/ placed In banks. Could even his ingenuity
| devise more striking Illustration OF M
! loose habit OF dealing with economic
/ the Treasury TO safeguard deposits oi
money In banks by ple ige 81 FONTS
/ He deals with each depository BY Itself
| Each bank stands on its own feet anf
| no tax Is imposed on its COmpe. ftors 1,
make up possible loss.