The Ellensburg dawn. [volume] (Ellensburg, Wash.) 1898-1914, 1909-02-04


IL could make larger loans than the
small bank. For instance bank with
pl'ooo,ooo capital and surplus could, as
at present, loan 800, 900 to one person.
"hiie bank with 800, 600 capital and
surplus could only loan so 600 to one
person. This advantage would in it,
sell draw to the large bank the large
deposits and the men doing business
upon large scale, for deposits follow
accommodations,
Then, too, there is certain business
advantage in deposi;ing with big
bank. 1t is worth something to be able
to refer to- big bauk when ones H.
nancial standing is being investigated,
and worth still more to have the advice
OF man of large business experience
when business enterprises are being
considered.
Besides these, there is social ad.
vantage in being on good terms with
the men who are prominent in the
banking world. Surely the big bank S
prestige will be worth enough to it
under the guaranty system; it should
not begrudge the smaller banks the
advantage which the guaranty of de-
posits will bring to them.
| cannot pass from this subject with
out referring to the fact that the big
bank needs the guaranty as well as the
little one, for big banks fail as well as
small banks, and the bigger the bank
the greater the calamity to the com
mnnity when it fails. No bank is so big
as to be absolutely beyond danger, and
community needs protection against
the big banks failure even more than
against the failure of the small banks.
II has sometimes been objecte d that
the guaranty system would bring into
the banking business lower class Of
men and reduce the average char
acter. On the contrary, the guaranty
Of deposits, submit, would, if it
made any difference in this respect,
bring into the banking business bet
ter class of men and raise, il that is
possible, the average of character. l.
is not to a mans dscredit that he is
not willing that one of his fellow men
should lose money on his account. 1t
is not mark Of character that man
should be careful OF his good name and
considerable of the esteem of his fellows
At present a successful farmer or bust
ness man may be induced to take stock
in 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 that bank official
men be guilty of criminal conduct
which will bring the bank into insol-
vency. 1t is even possible that the
bank S assets may be entirely dissipated
and that the honest citizen, who has
become a stakeholder, may either be
compelled to 60 beyond his legal labi-
lily or meet the bitter criticism of the
depositors who have suffered by the
failure. Would it not be worth some
thing 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 deposition could lose anything: |
am convinced that the guaranty of de-
posits would not lead to degeneration
in the personnel of the bankers.
TO Justify law guaranteeing depos-
itors, it is not necessary to show that
that the advantage 10 the bankers
would amount to more than the tax.
The examination of the banks would
continue to be made at he expense OF
the banks, even if it were certain that
the examination was OF no pecunlary
advantage to the banks. The law
would continue to require a certain
amount of reserve to be kept on hand,
even is it were certain that such law
brought no pecuniary gain to the bank;
and 40 the banks ought to be compelled
to insure their deposltors against Ioss'
even if it could not be shown that sucn
insurance would bring compromising
advantage to the bank. The bank
charter has value; if it. were not val
uable the bank would not be organized.
The bank charter is gift from the
neople through the law, and the people
,vho authorize the establishment OF
hank have a right to Demand IN re-
,urn that the bank shall keep the
pledge which it gives when it invites
denosits. and make good its promises
of security to those who deal with H.