The commoner. (Lincoln, Neb.) 1901-1923, December 27, 1907, Page 2, Image 2
". ' f"tvnn' ' vWWIf 2 !The Commoner 'W to 'A reserves. They can not loan the reserves,, to individuals but by loaning them to banks, they derive the income usually about two per cent. If instead of being allowed to keep a part of the reserves in other banks they were compelled to keep the reserves in their own banks but al lowed to count government bonds as a part of the reserve, they could protect themselves against emergencies and yet draw interest upon so much of their reserves as was covered by the bonds. There is no reason why the government bond should not be made available for borrow ing from the government whether the bond is held by individuals or by banks, but by allowing the banks to keep part of the reserves in the .bonds, they could escape the perils involved in the loaning of their reserve to cither banks. The other phase of the money question as it now presents itself relates to the security of depositors. The Wall Street financiers have no plan for the protection of depositors, and they resent any plan which will lessen the advantage which the big bank has over the little bank. Just now, however, the big bank is responsible for the one, and by refusing to return the money deposited with it by the smaller banks, has made the stringency as wide as the nation. The scare which has come upon depositors is likely to stimulate hoarding for some time to come. Not that depositors are justified in being frightened but because they are frightened, and a fright is. a fright whether it is reasonable or unreason able. Something ought to be done to restore confidence among the depositees. The president has recommended a postal savings bank. This is good as far as it goes, but it does not go far enough, and if it did, it would soon involve the government in a large amount of unnecessary work. The guarantee of tHe banks is, more simple and Involves less extension of govern mental activity. Two methods have been proposed for" the projection of depositors, first :a guarantee fund; second absolute security. Mr. Bryan advocated the, guarantee fund some thirteen or fourteen years ago and endeavored to secure the passage of a bill providing for such a fund. It was de feated then, although it is probable that it would be, -more popular now. An absolute guarantee', however, is better than a guarantee fund, first because it can be put into opeiatibn'more quick ly, and second because it leaves no room what ever for the operation of fear or a scare. It would require some time to raiso a guarantee fund sufficient to give confidence to the deposi tors, and no matter how large the fund might be, it would be so small in proportion to the total deposits that the more timid would still feel that they ran some risk in depositing. But an absolute guarantee iipbn the part of the gov ernment would restore confidence at once, and yet, the government would really incur no risk, for judging the' future by the past, the loss which it would have to bear would be little, and this loss could be collected from the banks In proportion to their deposits. The capital stock and the surplus" of the hanks would be the - government's security, and in addition to ;, the capital and surplus, the government would aiso nave tne nundred per cent liability which Is imposed upon stockholders by law. A de posit in a government bank would be as good as a government bond, and until the states pro vide for a similar guarantee of state banks, state hanks might be allowed to avail themselves of the national guarantee by putting themselves upon an equal footing with national banks as to inspection and security. When hankers are approached with this plan, they at once suggest that more strict super vision of hanks would be necessary. That is not an objection to the plan but one of the merit's of it When banks become liable for each other's deposits, they will be interested in better reg ulation and it will then be possible to secure laws that will prevent the exploitation of a bank by the directors or officers and other laws which will prevent grain and stock gambling by offi cials and directors. fa y " If it is urged that the government ought not to go into the business of securing bank deposits, it may be answered that one of the purposes of government is fp enable to do to gether what they can not so well do separately For instance, the school system illustrates the Co-operative power of the people as does the fnHliK100-, Bvo!f? extenlon of governmental 5 nyibeobjected to on th0 ground that It would take the government- into a new de partment. The rural delivery was objected to on that ground, and yet, who would today criti cise the government for attempting to bring the advantages of mail delivery to-the farmers? ft is certain that we must either have the guaran- teed bank or the. postal savings bank, and the guaranteed bank will involve the government in less work than the postal savings bank. The government new takes charge of every failed bank, collects its assets and applies them to the discharge of the bank's liabilities. That is all that 'would be done under the system of guaran teed banks, and as runs would be prevented and regulation be made more strict, there would be fewer failures than today. The guaranteed bank, therefore, would reduce rather than in crease the government's entrance into business, but the guarantee of the government would be of immeasurable value to the country by making the banks absolutely safe. The banks, too, . would profit by it because the tax which they would have to pay to reimburse the government on losses would be small compared with the profits that they would make out of the money drawn from hiding. It has been urged that bank officials would be less careful if deposits wore made secure. This argument is absurd, for the officials are selected by the directors, who are in turn re sponsible to the stockholders, and as the stock holders would lose everything before the de positors would lose anything, the officials would be under the same restraint that they are today. It is not necessary that the deposits should be insecure or that the community should be sub- " jecfed to the embarrassments that follow a bank failure in order to make bank officials attend to their business. The criminal law can add a far greater restraint than is imposed by the help lessness of depositors. The democratic party is not in power, but looking at the question from the standpoint of the interests of the whole peo ple, it ought to urge remedies which will meet the present need and protect the public as far - as possible from- a recurrence of such panics as that through which we are now passing. oooo FAVORING NEW YORK Mr. M. F. Dunlap, a .banker of Jacksonville, 111., and formerly treasurer of the national com mittee, made a speech a few" days ago in which he called attention to the partiality which the treasury .department shows New York City. He says: "There is on deposit now in the New York banks about two hundred millions of govern ment money. Their statements made a few days ago show that the clearing house banks of that city have about $215,000,000 of all kinds of money. In other words, they have their cap ital, surplus, undivided profits and deposits' all loaned out and are doing business on the $200, 000,000 which the government supplied them on which they are not paying any interest. "At this time the banks of St. Louis have $3,000,000 of government money, and the banks of Chicago have about $7,000,000, whereas as , stated, New York has about $200,000,000.' When it is remembered that this money is loaned to the banks without interest and that the banks loan It out at emergency rates, the favoritism appears even more glaring. And the matter is still further aggravated by the fact that these New York, banks by refusing to re turn the western money deposited with them have caused the stringency to spread over the entire country. The western banks are not to blame for the -present panic, and yet, the gov ernment instead of helping them, gives most of its attention to New York City, where the finan ciers have been so indifferent to the interests of the rest of the country. ; OOOO NOW WATOBI FOR TRUST AMENDMENT The senators and members should be on their guard against the amendment which is like ly to- he proposed to the Sherman law. It is quite certain that no anti-trust legislation is gojnff to he Proposed by the republican leaders this session, but, it is more than likely that thev l e1 to "miss? thrpugh an amendment of the Sherman law which will paralyze its use fulness. There has been a good deal of talk of inserting the word unreasonable in the law so that it will not prohibit combinations in restraint of trade but only combinations which unreason ably restrain trade. This leaves everything with .the judge, and he decides whether the restraint complained of is an unreasonable one. The inser tlon of the word unreasonable would nullify tho law and the domocrats ought to resist to the lai? any such attempt. If the republican leaders will present a law which draws the line at monopoly and arbitrarily fixes tlie nor cent of the product which the corporation or-combination can control, then the present, law can be ; VOLUME 7, NUMBER 5ft entirely repealed, but so long as this n, , law on the -statute books, it would be in 7 ward step to weakeii it at all. it would Ck" sensible to talk of amending the teStart burglary so as to prevent an unreasonable ak ing of a man's property or prohibiting more than two burglars to enter a house at one tlm?S preventing the burglars from taking more ?h half they found in the house. It woM be sensible to amend the law against killing by lim Itfng punishment to killing which was brutS" leaving the polite and refined taking of lifpTn go unpunished. L l0 Watch the republican leaders in the housa and senate a little and see that they not onlv have no thought of protecting the public from the trusts, but will, as soon as they dare do so weaken the existing laws on the subject. As a campaign is approaching, they may not have the courage to present at this time the amendment which they desire;- but wait until the short ses sion that meets after the election the job session and they will bring out their schemo for the further protection of the trusts. OOOO OKL AHOMA PIONEER J Oklahoma, the newest of the states, is plunging at once Into politics. Having adopted the best constitution in the United States, she is now prepared to set the country an example in matters of legislation. While they have been discussing the' guarantee of bank deposits in other places, her legislature has gone to work and a system has been adopted which, coming into operation on the 17th of February, will give to the depositors the benefit of a guaranty fund. The following is the press dispatch an nouncing the inauguration of the system: "Guthrie, Okla., Dec. 18. The new bank ing law for Oklahoma whereby is provided a guaranty fund for the protection of depositors in insolvent banks, will become operative Feb ruary 17, 1908. Its makerd believe it will make impossible a run on an individual bank or per mit a money panic -in the state. Each state hank is required to pay to the state banking board a sum equal to one per cent of its daily average deposits. Whenever this sum is de pleted it shall be increased hy further assess ments. When a bank fails, the state bank ex aminer steps in and forthwith pays the deposi tors from the guaranty funds held by the bank ing board. These payments become a first lien on 'the assets of the defunct bank. National banks that wish to avail themselves of the bene fits of the law may do so upon a plan agreed upon by the banking board, the bank commis sioner and the comptroller of the currency of the United States." Good for Oklahoma! The guarantee fund is, good; an absolute guarantee -would be better and. involve no real! risk to the government, for the state would have the assets at all the banks to secure it. It will be interesting to watch the experiment, and if it is a success, as it doubt less will be, it will be copied by other states. Oklahoma is wise in admitting national banks to share in the benefits of the plan. We shall sometime come to a guarantee of national banks, but until that time it fe only fair that the national banks established in a state shall share in the "benefits of the state1 guaranty fund. OOOO THE SUBSIDIZED PRESS When at Richmond, Va last October, Mr. Bryan referred to the subsidized press and said that sbme of our metropolitan newspapers were being conducted not as newspaper enterprises but as adjuncts of exploiting enterprises and that the owners of the papers employed brilliant edi tors to chloroform the readers while said owners picked the pockets of the readers. The New York World demanded proof.- In a speech in New York Mr. Bryan replied" to the World's demand and said that it was not necessary to furnish proof In support of a self-evident truth and that he did not care to enter into a personal controversy with newspapers. It is a well known fact that a number of the metropolitan papers are owned by men who are interested' in various kinds of exploitation, and Mr. Bryan has felt complimented hy the fact that all of these papers have been his bitter and continuous opponents. He has not expected fairness from them, and their opposition has benefited rather than in jured him. But while the ownership of some of these papers is known to a few, the evidence of their ownership is not easily obtainable. One paper, for. Instance, is controlled by the Morgan com bine, another 'is controlled, by the Louisville & s. I y II .! 'i ".. $:.! A k . . A r" f-sMtf . m U'tAftfrttlS. . !,,. li .. 1'U u&dfeiMtfUf 'rf Saa&lJ&&iBBiJiJld -i.V: Mrar-,? iVMiSVam 1 )TgHj H iSttiifliflfll