The Marshall republican., 1908-10-02
VIEWS OF.AN Expert.
4hall Banks De Made Liable for
Csc Another's Debts?
1scognized Authority sn Financial
Questions Discusses Practical
bsasiogs Of Proposed 9Sag-
H., enSe0 1IAth

, The proposal 70 require eNe banks &C
the cOustry % guarantee sach others
deposits ewep lts pressaa strength %
The ananctal dlHtuThaRcs q last faIl.
1t 10 U41Ot a. q EoaR5 90 preventing
panics, and there 10 10 9isagreemene
about tho ~6esirnhBaey ef accomplish
hna that ParpOss. Resgt 81 us agree
.hat q repetition ee tho conditions
which eGistsd lsSe fta EsoGad be made
impossible, bat tans % by 10 means the
saly way % do n, OF eAs best way.
For years tho advocates Of compr0-
henslve cHrYency VserEcn have pOlntee
out that with 8IA,O96.Soo,099 Of bank
deposits In tbs 9gensry asa oaly about
S3,O00,OO0,oO9 ~ Esozay GA teid In the
csuutry, both N tAG banks and out,
there should be Rszhs metkSd provided
by which. N the BASIN Of good assets,
the ssDvaS Of lsw1nl currency could be
readily Increased 60 Rseat exceptional
demands, whethoT gucA Demands were
Que to seasons Of unusual business nc
tavity or to ALARM among dcpositors.
Their foresight aud ~arEaEaents did not
avail, but they Xrs hardly to b. swept
of their fsot o by impatient zeal for
this new. and, no they regard it, ILL.,
considered sckpaae. Tasy sand FOR @
complete ara scientific treatment "
che subject.
The guaranty OF deposits lS n crude
and imperfect remedy at best. 1t does
not recognize or attempt to cure the
defects in Ous banking ana currency
systems, but aLHSs oE2y at Rersuadlng
dtpositOrs not TO @eew their deposits.
The losses b. ~depositoTp by the failure
of national banks has become an lnslg-
nitcant percentage, ana IL growing lcss
every year, rs a result OF natural, cvo-
~lutionary progress In banking. The
standards are being constantly raised,
and the efficiency Of official inspection
aud supervision constantly Improved.
The true line OF o~evolOBseent Is not by
any revolatierary policy, but by hold
ing in&iTldual bsnhS1s to vet
~stricter account, and at the same time
enabling every properly conducted
bAhk 90 readily obtain a supply Of cur
rsncy TO meet all demands upon Il.
The fundamental weakness IN our
currency system Ia IN the fact that it is
not readily responsive to the needs Of
the country. The Legitimate demand
for money varies from year to ycar,
and from season 10 season in the same
year. 1t is a familiar fact that there
is a great deal more business to he
handled from September LIST to DeccIn-
Der 31st each year than In any other
four months OF the year, hut there Is
no more money in the country unless
gold is Imported for the purpose.
Would Lead to Reckless Banking.
As a remedial measure the guaranty
OF bank deposits Is not only inadequate,
but it 10 worse than inadequate, for il
proposes to overturn the principle ~
Individual responsibility by means OF
which the banking business has been
raised to It's present high standards.
and upon which all individual and So
cial progress is based.
The proporal ~contcmplatcs that the
public shall be relieved entirely from
the exercise OF judgment and dig
crimiRa ton In the choice OF banks, and
while it Is highly desirable that all
banks shall be made safe, to the END
thai even the most ignorant and con
iding may be protected, it Is still true
that an alert public opinion has great
Influence in maintaining proper bank.
ing standards. We cannot afford to do
without that influence.
Under present conditions the invest
mentS, the personal habits, the general
character and abilities Of the banker
are under the constant scrutiny Of the
conMunity, and a matter of public IN
teroEt. Notwithstanding occasional in
stances in which the public has been
deceived, 1t may be stated as a general
proposition that an unblemished char
acter and a reputation for good busl-
neEs ability and conservative Judgment
have been necessary to success in the
banking business. The public looks
over the individual who is to receive,
ubu llNtsl anu Dt ICSpDLSlDlt lpI It's
money with some discrimination, and
the elimination Of the unfit by the
scrutiny and composite judgment of the
community Ia a factor Of the highest
value in maintaining the standards Of
the banking business. 1t is, however,
4 factor entirely overlooked by the nd
yocates of this scheme.
They calculate the Insignificant per-
esntags Of loss to total deposits under
present conditions, and assume that 1t
greater lssses would occur after CHAR
actsr ceased to be u factor in the busl-
ness, and ali deposits were given blind
~ to whoever would bid highest for
them. To the objection that this elm
iHation Of character as a factor in the
acquisition Of deposits must tend to
promote reckless banking, reply In
made that bankers will be deferred
from recklessness by fear Of losing
their own money. The reply misses the