The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1908-08-28


the business interests of community.
But, as matter of fact. the big bank
would still have several advantages
over the small one. In the first place.
small bank For instance, bank with
s!'ooo,ooo capital and surplus could, as
at present. loan 500, 900 to one person,
While bank with 100000 capital and
surplus could only loan $4,000 to one
person. This advantage would in itself
draw to the large bank the large de-
poslts and the men doing business upon
a large scale, for deposits follow &C
commodations
Then, too, there is a certain business
h aavantase in dspositing with q pig
10 refer to big bank when ones mn
ancial standing is being investigated,
and worth still more to have the adj
vice or man of large business ex-
perience when business enterprises are
Delng considered.
Besides these there is a social adj
vantage in being on good terms with
the men who are prominent In the
banking world. Surely the big banks
prestige will be worth enough to 1t
under the guaranty system; 1t should
not begrudge the smaller banks the
advantage which the guaranty of de-
posts will bring to them.
1 cannot pass from this subject
without referring to the fact that the
big bank needs the guaranty as well
as the little one, for big banks fail as
we'll as small banks, and the bigger
the bank the greater the calamity to
the community when It fails. No bank
Is so big as to be absolutely beyond
danger. and community needs pro-
lection against the big banks failure
even more than against the failure Of
the small banks.
Raise Standard Of Banking.
1t has sometimes been objected that
the guaranty system would bring into
men and reduce the average in
character. On the contrary. the
guaranty of deposits, submit, would,
II 1t made any difference in this re-
spect bring into the banking business
a better class of men and raise. II
that Is possible, the average of
character. 1t is not to a mans dis
credit that he is not willing that one
of his fellow men should lose money
on his account. Is 1t not mark OF
character that a man should be care
full Of his good name and consider
ate Of the esteem of his fellows? At
present a successful farmer or BUSH
ness man may be induced to take
stock in a bank. 1t may be that his
name is desired to give standing and
credit to the bank. but such man
is constantly haunted by the fear
tldI d DdIlk OIIlCldl may Do Sullly VI
criminal conduct which will bring the
bank into insolvency. 1t Is even pos
sible that the banks assets may be en-
tirely dtssipated, and that the honest
citizen, who has become a stock
holder. may either be compelled to go
beyond liability or meet Nthe bitter
criticism of the depositors who have
suffered by the failure. Would it not
be worth something to the stock
holder. in peace of mind. to know
that the maximum of his loss would
be the value of his stock and the 100
per cent liability, and that no deposit
tor could lose anything? I am con-
WINGED that the guaranty OF deposits
would not lead to degeneration in the
personnel of the bankers.
To Justify a law guaranteeing de-
positors, 1t is not necessary to show
that the advantages to the bankers
would amount to more than the tax
continue to be made at the expense
Of the banks. even Il It were certain
that the examination was of no
pecuniary advantage to the banks
The law would continue to require a
certain amount of reserve to be kept
on hand. even II itSwere certain that
such a law brought no pecuniary gain
to the bank; and SO the banks ought
to be compelled to insure their de-
positors against loss, even IL 1t could
not be shown that such insurance
would bring compensating advan-
tage to the bank. The bank charter
has a value: if it were not valuable
the bank would not be organized.
The bank charter is a gift from the
people through the law. and the peo-
pie who authorize the establishment
of a bank have a right to demand,
the pledge which it gives when 1t in
vites deposits. and make good Its
promises Of security to those who
deal with 1t.
But as a matter Of fact, the banks will
as a rule, gain more from the law
than they will lose by the tax imposed
by the law. The experience of the Ok
lahoma banks shows this. The interest
collected upon the increased deposits
will far more than pay the losses oc-
casioned by insolvency. But two banks
have failed and the assets have in both
cases been sufficient to reimburse the
fund.
Der that the question is not merely
depositors shall be made Sc
cure. but whether the security shall be
given by the banks themselves or by
the government through postal saw
ings bank.
The refusal of the banks to permit
the passage of a law granting security
to depositors is responsible for the
growth of the sentiment in favor of
the government savings bank. and the
sentiment will continue to grow unless
is done to satisfy the de-
mands of the people upon this subject.
Postal Savings Banks.
The Republican party proposes the
of a postal savings bank
system; the Democratic party prefers
the guaranteed bank because 1t is bet
ter for the depositor and better for the
banker-it gives the deposition the Sc
curity which he needs and yet leaves
the banking business in the hands of
the banks. But the Democratic plat
form declares for "a postal savings
bank If the guaranteed bank cannot
be secured" and in November more