Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1908-03-26
COMMONER
COMMENTS
Mr.. BRYAN'S OPEN LET
TER TO Mr.. FORGAN.
SELFISHNESS OF LATTER's AReU.
MENTS POINTED OUT.
Interests of Bank Stockholders Placed
Above interests of Depositors-
How Government Guarantee
Law Would Work.


James B. Forgan, president of the
First National bank of Chicago, gave
to the newspapers an open letter ad-
dressed to Mr.. Bryan in which letter
Mr. Forgan argued against the pro-
posed guarantee of bank deposits and
insisted that Mr. Bryan, in former
criticism of Mr.. Forgan's position, had
misquoted him. Mr. Bryan understood
Mr. Forgan to say that he was op-
posed to the guarantee of deposits be-
cause it would make all banks safe"
whereas what MIR. Forgan really said
was that it would make all banks
equally good" In an open letter adj
dressed to Mr. Forgan Mr.. Bryan ac-
cepts the correction, adding that he
thinks the distinction drawn is very
fine.
Mr.. Bryan resumes:
"You object to the governments
guarantee because it puts all banks
on an equality and makes all banks
equally good, and you object to it for
two reasons: First, because it would
deprive banks like your own of the
advantage which they have won by
Conservatism and good management
You intimate that it Is not selfish for
you to defend yourself and your bank
against a policy that would 'despoil'
you or it of vested rights and prop,
erty,' and are willing to admit. your
selfishness if that can be considered
selfish,
Let me make the charge SO directly
that there can be no question about
what mean l charge that you put
the interests Of your stockholders
above the interests of your depositors
and that you put the interests of the
big bank above the interests of the
various communities and of the pub
lie at large.
Let me remind you that that which
you regard as good will is largely an
advantage created by law The good
will which you measure in dollars and
cents is not entirely due to good man
agement 1t is due, In the first place,
to the fact that you are national
bank, and you are national bank
because the representatives Of the peo-
pie enacted law that permitted you
to organize as national bank. 1t Is
due in part to the fact that national
banks are inspected and regulated by
law, and these laws are made by the
representatives of the people. 1t is
due in part to the fact that many
people believe that deposits in nation
al banks are in some way guaranteed
by the government as the bank note
Is.
! when the laws were made, the law
makers thought they had provided for
the security of the depositors, and it
is not only unfair in you to count as
entirely personal to yourself or your
directors, the confidence shown by the
public in your bank, but it is selfish to
insist that the people have no right
to obtain further security, even If, as
q result of that, your bank loses some
of the advantages which 1t now has
over smaller banks. The bank exists
for the benefit Of the people. 1t is a
mistake to assume that the people ex.
ist for the benefit Of the bank
"The law requires that a certain
percentage of the deposits shall be
kept as a reserve-why? For the ben.
eft of depositors. The law provides
That no more than ten per cent. of the
capital and surplus shall be loaned
to one person-why? For the protec-
tion of depositors. Every law passed
for the protection Of depositors tends
to equalize the banks, and you can
make just as sound an argument in
favor Of the repeal Of all restrictions
as you can make against the guaran.
tee Of deposits. The fundamental
difficulty is that you look at the ques.
tion from the standpoint of the bank.
er and not from the standpoint OF
the depositor, and you insist that the
depositor shall be left unsecured in
order that your bank may have an ad
vantage over smaller banks.
What security do you give your de.
positors that other banks do not give
their depositors? Is it that the officers
of your bank are better men? They
may die, and inferior men take their
places. Is 1t because your directors
are better than other directors? The
board Of directors may change. Is 1t
because your stockholders are better
than others? Your stock is sold on
the market and change may take
place any day in the ownership OF
the stock, that will entirely change
the character of the bank; and If such
change takes place, who will know it?
"1n the recent stringency, the banks
all over the country felt themselves
justified in suspending payment upon
checks, and for the first time in our
history the depositor was told how
much of his own money lie would be
allowed to draw out for the carrying
on of his business Why was this
extraordinary step necessary? Because
the banks throughout the country had
deposited a part of their reserve in
\ New York and other reserve cities,
and could not withdraw them. Each
bank feared run IL it permitted the
withdrawal Of deposits, and why
would depositors want to withdraw?
Because they we're afraid OF losing
their deposits II they did not.
n answer vour first argument. there