The Rich Hill tribune., 1908-10-08
Shall nhnks Be Made Liable for
One Anothcr's Debts2
Recognised Authority on Financial
Questions Discusaes Practical
Bearings OF Proposed oear-
Rnteo Plan.
tBy George r. Roberts. former Dl-
r1llnr q AZ. AIlni


deposits owes iis present strength 70
the financial disturbance Of last fan.
1t is urged rs means Of preventing
Ianics and there is 10 disagreement
about the desirabnity Of accomplish
ing that purrose. Nest Of us agree
that a repetition of the conditions
which existed last fail should be made
impossible. but this IS 10y no means the
only way to DO ii, or the best way.
For years the advocates of compre-
hensive currency reform have iolnted
out that with sl40CQoG0000 of bank
deposits IN ths country and only about
S3.00OU00OO0 Of money an told ia the
country, both in the hanks aud out
there should be some method provided
by which. on the basis Of good assets.
The supply Of lawful currency could be-
readily increased to meet exceptional
demands, whether such demands were
Que to seasons Of unusual business ac-
tirity or 80 alarm among deposiiors.
Their foresight aud arguments did not
nvaii, but they are hardly to be swept
OF their feet now by impatient zeal for
this new, and as they regard d, ill.
considered scheme. They stand for a
complete and scientific treatment Of
the subject
The guaranty of deposits is q crude
and Imperfect remedy at best 1t does
not recognize or attempt 10 cure the
defects in our banking ana currency
systems, but aims only at persnadiue
depositors not to draw their deposits
The losses 10 depositors by the failure
OF national hanks has become an inslg.
nificant percentage and is growing less
every year. as a result Of natural. evo-
iutionary progress in banking The
standards are being constantly raised,
and the efficiency Of official inspection
aud supervision constantly improved.
The trne line Of development IS not by
any revolutionary policy, but by hold
ing Individual bankers 10 set
sfrieter account, and at the same time
enabling every properly conducted
hank 70 readily obtain supply Of cur
rency 20 meet an demands upon IT,
The fundamental weakness in our
currency system IS in the fact that Il is
not readily responsive 10 the needs Of
the country The legitimate demand
for money varies from year 10 year,
and from season TO season In the same
year II is a familiar fact that there
Is great deal more business 10 be
handled from September 1st 10 Decein-
Der S1st each year than IN any other
four months of the year but there IS
no more money Ia the country unless
gold is imported FOR the purpose
WouId Lead 20 Reckless Banking.
As a remedial measure the guaranty
of bank deposits IS not only inadequate,
but It is worse than inadequate. for il
proposes TO overturn the principle OF
Individual responsibility by means OF
which the banking business has been
raised 70 its present high standards.
and upon which ali individual and So
cial progroes Is based
The proposal contemplate that the
public shall be relieved entirely from
the exercise Of judgment and dis
crimination in the choice Of banks. and
while Il is highly desirable that an
banks shall be made safe, to the end
that even the most Ignorant aud con-
hding may be- protected, Il is SIN true
that an alert public opinion has great
influence IN maintaining proper hank.
ing standards. We cannot afford 20 %
without that influence.
tnder present csnditlens ihe invest.
laeuts the personal hsbits, che general
character and abilities Of the banker
are under the constant scrutiny of the
community. and a matter Of public in.
teyest Notwitbstandipg occasional 10.
stances Ia which the public has been
deceived Il may be stated as a RoaeraI
proposition that ap uublemished CHAR.
acter aud a reputation Tor good busl.
ness ability and conservative Judgment
have been necessary to sucoeE in the
banking business The public looks
over the individual who is 60 receive
aud invest and be responsible FOR ltn
money with some Discrimination. aud
the elimination Of the unfit by the
serutiny ana composite Judgment of TIE
community is a factor of TIE highest
value 10 maintaining the standards oi
the banking business. II is, however
a factor entirely overlooked by the ad
Foeates Of this scheme
They calculate the insignificant per.
eentage o. loss to total deposits under
present conditions, and assume that no
greater losses would occur after char
aoter ceased 10 be factor in the busl.
ness, aud all deposits we're given blind
~ 70 whoever would Sid Highest Tor
them. To the objection that ibis elm.
inaiion OF character as a factor IN The
acqulsiiioH Of deposits must tend 90
promote reckless banking reply Is
made that han.iers viii be- deferred
from recklessness by fear OF ioslug
their own money. The reply misses the