Evening star., 1932-06-11

Few policies have been so generally
condemned In public comments as pro-
vision in a bill made part OF the con-
gressional grist by which large luno
would be provided to guarantee bank
deposits. It is held that State ex-
perience with the policy has shown that
it has serious defects, especially in en-
coura ging loose bank methods.
mo doubt, bank failures and at
tendant losses" says the Buffalo Eve
ming News, have impressed many
congressmen with the ioea that they
may add to their popularity by estab-
fishing a Federal guaranty for deposits
hereafter. 1t is high time they realized
that if this kind of devotion to vote
hunting really should be approved by
the people the time would not be far
off when there would be no Government
left to be plundered. Men charged with
responsibility for governing the United
States must give some thought to It's
interests, instead of devoting their
minds wholly to plans for deludng
voters at the next election. How long
do the supporters Of this bill think they
could be content merely to make good
Would not the next step be to reimburse
occurred?"
,, State experiments are cited by the
Sioux Falls Argus-Leader, which refers
especially to the attempt in South
Dakota, with the conclusion: Every
thing was lovely as long as bank failures
were few and far between, but when
the strain became heavy the fund
collapsed 1t didn't function when 1t
was really needed" The ArgusLeader
advises: LAS result of our experience,
we have learned few things about
such guaranty laws. One is that they
place premium upon poor banking
Any one could start bank at cross
roads and would likely receive con-
! siderable amount of deposits from per-
sons who felt that their funds were
protected and that it was no longer
necessary for them to ascertain the
integrity of the banker and the stability
| of his institution. That was bad, oil
course. and We paid q severe penalty
If Federal guaranty law is to be en-
| acted the faults of the State ventures
should be studied. One is the fact
| that such a guaranty to be OF any
worth must be operative in foul weather
| as well as fair. The other is the estab-
| lishment of the most rigid banking
| regulations and their strict enforce
ment. We should have in this country
an absolutely sound banking business
| To achieve this objective 1t must be
conservatively operated and carefully
supervised Abuses that have been
permitted in the past must not De
tolerated. The laws set up for banking
should be respected at all times and nc
| banking superintendent should be
allowed to tighten the regulations o.
permit infractions upon any occasion.
X **
"The measure involves . principle
| according to the Morgantown Dominion
News, that goes to the heart OF our
banking system. 1t Is one, therefore
that requires the most careful and de-
tailed study before it Is given a place
on our statute books" That paper
also comments: "The record Of failures
that several States have experienced
with experiments of this nature does
not permit an optimistic outlook for
| the Federal venture, If 1t becomes law
Eight States have tried the thing E1gnt
States have abandoned the idea. just
how the sponsors of the measure pro-
pose to work out feasible plan OF oper-
alton has not been made clear. Tech
nical obstacles to q successful venture
of this sort are encountered on every
hand. In view Of the dreary uniform
ity in the fate Of the State experiments
Chairman Steagan Of the House Bank
| ing and Currency Committee Is mol
convincing when he attributes earlier
failures to laxity in supervision. espec,
cially when he offers no proof thai
supervision over banks taking advantage
of his bill will be any more strict.
II r Il \
Observing some justification for the