The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-03-08
An Incurable Case.

In his address to an organization
of bankers In Washington the other
night Secretary BRYAN showed that
he was still the same old apostle
of financial fallacy that he WAS IN
1896. Government guaranty of bank
deposits has in recent years taken the
place of free silver III the patter
Of his public discourse. and in his
remarks TO the Washington audience
he exhibited the same evangelistic
attachment I o his new delusion that
characterized his efforts twenty years
ago To usher in a sixteen TO one dis
%pensation.
Bank deposits are credits recorded
on the books of a bank. Probably
Mr.. BRYAN can never be- made to
understand that the bulk of these
deposits are the creation of the loan
account. but he knows no more about
the nature OF credit than he knew IN
1896 about the nature of money. To
undertake to guarantee bank deposits
means simply to undertake Il public
guarantee Of private credit.
What would be Mr.. BRYAS's att.
tude toward a proposal 10 have the
Government guarantee the credit OF
the railroads? Would he approve
a project for the establishment of n
private merchant marine through a
Government guarantee of the securi-
ties OF the ship owning corporations?
There would be no essential differ
enc between such governmental de
partures and the guarantee OF de-
posts in the banks.
What happens when Government
guaranteed deposits are put to the
test Is quite adequately demonstrated
In some of the consequences Of the
European war, Great Britain and
other b~elliccrcnt countries have guar
anteed private credit. They have
placed public credit under the whole
structure of private responsibility. and
the result Is seen in the rising for
eign premiums on gold. As part of
IN Administration which chcrlshes
the notion that it has provided for
an extraordinary abstraction called
"a democracy of credit Mr.. BRYAN
can doubtless see no reason why all
credit Is not made ultimately good
as he has never been able to see
why IA fat dollar is lot as good as "A
dollar Of gold.
When the guarantee of bank de-
posts Is talked Of. what Is actually
meant Is the guarantee of bank loans
and other investments. Nothing
could be more conducive To ultimate
disaster than the inauguration of a
policy which tended 10 weaken in.
ccutives for the exercise of sound
judgment and the practice of the
lng funds and the use OF bank lend
Ing power. As n great emergency
measure the Government might try
to do what the British Government Is
lIN INK 10 no III lllS TfSIlt'I, llll hNhll
then the question o%htrudcs, Who is Ia
guarantee the Government. and what
will the condition of the country b-
after its u have been strained
to maintain the credit of the Gov.
eminent?
So far as the normal activities Of
business are concerned. the best guar
antee of bank deposits ms of other
forms of credit Is furnished by an
enlargement to the free play Of com
pctltivc forces In the development OF
sound and able management of bust
ness affairs. The more Governments
lnterfercS with this free play the
greater the danger Of business dchil.
ity in n time of strain when strength
Is needed. Government a%dulteration
of business automatically wcakens
the qualities of private initiative and
resource which keep business sound
and wholesome.