New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-02-28
Liability Is Unlimited.

With private banks. however the LA
bAity FOR the funds OF depositors is unlim-
tied, and the total private means OF each
partner are subject TO the firms obliga-
tons. From the early days Of banking
al over the world until about seventy
hve years ago the rule was that the
/ community used private bankers as their
chief depositares. Then came I'm. though
not without great public opposition. the
plan OF creating banks as stock corpora
TONS with the very purpose II limiting
the risks of the owners of these banking
corporations
Strong as such institutions have proved
10 be. II may be said with some reason
that the common law which requires that
II any private banking house Is forced 10
suspend the private fortune OF every
member of that firm shall he utterly
swept away before a depositor suffers the
loss OF !, penny is unquestiOnably fac
Tor tending toward prudent and conser-
awe management In face OF the avail
able records. showing a considerable mum
Der oi suspensions among Incorporated
institutions IN New York City. a. the re-
SUIT OF the 100, panic. We can recall no
instance whatever Of the similar suspen-
! sion OF any private banking house hand
dlinS corporate deposits
In Wow Of these facts, we submit
that IN this matter Il would be wise
to secure evidence from all LARGE cities.
barring upon the benefits or tho actual
dangers shown by experience, before
proposing any law the effect Of which
automatically might be to deprive in
terstate corporations from exercising
their best Judgment as to where they
may orudertIy extend credit.
In essence, II a corporation is TO be
prohibited from extending a credit Of
100000 to banking house which, il
has reason to believe. can return that
ID II.
law not be invoked TO prevent il ex.
tending merchandise credit Of similar
amount 70 some solvent customer
Tho Force Of Public Opinion.
rs the final point of this memorandum
We venture To submit the consideration
that I'm a strong public opinion such as
exists in this country. there lies the great
est safeguard Of the community-aIways
assuming that Congress will evolve
basic system OF banking which is scientific
aild sound, as at the present time ours adj
mittedly Is not. The public-that is. the
d"positors the ones who intrust bank
erS With such influence and power az they
to-day have in every civilized land and
the public Is unlikely 10 intrust that rover
10 weak or evil hands Your counsel
asked more than one witness whether the
present power held by bankers i'm this
country would not be a menace II IL lay In
evil hands.
Such an inquiry answers itself. All
power. physical, intellectual. financial
or political. is dangerous in evil hands.
" Congress were to fall into OWL hands
the results might be deporabIe. But
10 US II seems as little likely that the
citizens OF this country will I'LL Con-
gress with rascals as il is that thew will
intrust the leadership of their bust.
ness and financial affairs to a set Of
clever rogues. The only genuine power
which an individual, or a group Of in
dividuals, can gain is that arisina from
the confidence reposed in him or them
by the community.
Every town. large or small. seers 10
choose limited number OF men (mer-
chants, manufacturers. lawyers and
bankersl 10 represent Ii in the manage
ment of its chief. local industries Those
men are intrusted with such heavy re-
spons!biities because Of the confidence
which their records have established. and
ollE So long as their records are unblem-
lshed do they retain such trusts
These are axioms which II seems almost
idl" Ia repeat. They apply to all busi-
ness. but more emphatlcally, We believe
commerce. To banking the confidence OF
The community is the breath from which
II draws its life. The past is fun OF ex-
amples where the slightest suspicion as
W tne conservatism or the methods OF
bank = management has destroyed con-
hdencc and drawn away it's deposits over
night. Much. therefore. may be left to
the instinct and the force Of public opin-
ion. and, finally. In urging upon YOU
once more the establishment of n sound
ranking system, We venture TO question
the wisdom Of ENGRAVING upon such new
system many special provisions designed
to guard against particular evils. but
which. being restrictive in their nature.
arc likely so to hedge about the business
or banking as to curtail severely the
country's development.
We believe that with a scientific
banking system firmly established
many features in our present situation
perhaps deemed Objectionable by you
will Of themselves disappear, and that
this country will enjoy the experience
Of other countries, which, with nothing
like the Same amount Of banking
statutes in force az We have, are yet
innmeasurably froer than America from
banking failures and from those %.
riodic financial disturbances which
bring misfortune TO rich and poor alike
and except for which these United
States to- day undoubtedly would bs in
enjoyment Of a political and national
prosperity FAR surprising any that has