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The Commoner.
VOLUME 8; NUMBER 31
M 1 T,'
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GUARANTEED BANK DEPOSITS
(Continued from Pago 9)
no merit In excelling In conservatism
or ability In management. It would
bo introducing into tlio banking bus
iness of tho country tho grossest
error that now exists in connection
with labor unions. It would reduce
all bankers to tho samo level and
thoro would bo absolutely no reason
why anyone should not drop into the
first bank he came to to doposit his
money. The government being re
sponsible for the deposits puts all on
an equality and makes all equally
good. Besides this, I think It would
bo practically socialism for tho gov
ernment to undertake tho guarantee
ing of tho enormous deposits in the
banks. Tho stockholders of the
banks supply tho capital and under
tho law are liable for doublo tho
amount of tho capital subscribed.
They have been accustomed to get
for supplying this guaranty to de
positors all tho profits that can be
made in tho business. Why the
government should simllarily guar
antee deposits, even if the banks are
taxed for it. without Rotting the
profits in tho business I can not see.
If tho government is going Into the
banking business to tho extent of
guaranteeing all the deposits it had
better go into ft direct and make all
the profits that can be made out of
It."
Tho answer to Mr. Porgan Is,
there is no escape from a tax levied
on tho prudent, careful and success
ful banker to pay for tho acts of tho
reckless, dishonest and improvident
banker. Every bank failure Ij a loss
to tho surviving banks, either imme
diate or remote. A loss In business
by Impairment of confidence in
banks. Why did Mr. Forgan's bank
join the other clearing house banks
of Chicago in taking over the assets
and liabilities of the failing Walsh
banks two years ago? It was not
lor profit, bocause I am reliably in
formed that there will be a probable
loss to the clearing house banks as
a result of this transaction. It was
fear that public confidence would be
lost.
This city still suffers from the
bank failures of fifteen years ago
and will suffer for years to"" coino
The loss to Lincoln in. banking pow
er by tho bank failures of the former
panic, can not be estimated. There
is no doubt but what a fair return
on the banking power lost to the city
by those disastrous failures would
provide a guarantee fund of goodly
proportions. The banks of this city
today are paying the penalty for the
failures that occurred hero fifteen
years ago. It would seem that it
would be much more economical and
much more profitable, as a business
proposition, to provide against a re
currence of this kind than to keep
paying the penalty long afterwards;
The contention that a guarantee
fund would reduce all banks to a
level and that people would not dis
criminate as between banks, will not
hold good, v for care, conservatism,
attention to business and courteous
treatment would pay the same re
turns under a system bf guarantee
as, they do now Brains, ability and
character would still win reward.
I do not think the argument Is
well grounded that the provision for
a guarantee fund would be an induce
ment to reckless banking f6r under
a guarantee fund the stockholders
of nhank would have their invest
ment of capital and surplus and con-
.TO-NIGHT
i
2fc502
m
tagclft
tingont liability Just as they do now
and boforo tho guarantee fund could
bo touched their entire investment
would bo lost to thom. So that I
do not seo why tho incentive to the
destruction of a bank by its man
agement would be greater on ac
count of a guarantee fund.
Then it must be remembered that
if a guarantee fund Is provided by a
tax on all the banka, if the manage
ment of any bank began to show
indications of redded business or
incompetent management, self-lnter-eBt
would nromnt the other banks
to immediately sit up and take
notice.
As to a guarantee of bank depos
its being practically socialism or the
means of introducing into the bank
ing business tho gravest error that
now exists in connection with labor
unions, I am compelled to tho belief
there are no grounds for the assump
tion. These are atonic ar hiatus
offered by every interest that opposes
legal regulation or restraint and not
based on a fair presumption of re
sultant effects in this ease.
Has the depositor any right in
equity to expect protection over any
other creditor? Per se, no. This,
however, brings us to the meat of
this question of the guarantee fund
to protect bank deposits. It is not
the protection of the depositor that
is tho underlying reason for the pro
posed institution of a guarantee fund,
but the deposit. The reason behind
tho present agitation for a guarantee
fund is in no way sympathy for the
depositor but concern for the deposit.
The bank deposits of a city, state or
nation are the very life blood of its
commerce and business integrity.
They are a concrete, essential force
in tho commercial structure and it
is as such that wo must view them.
So vital are the bank deposits to
the life of trade and commerce that
oven tho thought of their destruc
tion brings a thrill of fear to every
line of business. They are a com
mercial necessity. Scatter the ag
gregated twelve billion dollars of de
posits, now in the banks of the
United States, into the hands of the
individual owners and the cities of
this country would resemble the
silent streets and unpeopled towers
of the Band Lands of South Dakota.
Few Indeed are the large Indus
trial or business interests thUfi.do
Trf donnnfl fn n ornntor nr lomffV""."!
gree upon borrowed capital at tr" ""'hut
finn run ntrfrAcnrlnn nf thin fST .-..'
billion dollars of deposl$JSKthe
source of their supply. Deslroyit
and limit tho business of this coun
try to the actual capital employed
and what might be borrowed from
individuals and nearly every com
mercial and Industrial Institution in
tho country would he crippled or de
stroyed. It is necessary, therefore,
to look upon the bank deposits of
tnis country as a concrete entity es
sential to the business and commerce
of tho country and therefore of such
vast Importance as to bo guarded
with every care possible.
Much more might be said In the
way of objection to a proposed guar-r
anteo fund and much naore might
bo said In Its favor, but, the foregoing
states, as best l can ithe leading
thoughts pro and con oa tnia ques
tion. If a guarantee- fund Is provided., in
my opinion, there Is ona restriction
that Is absolutely necessary, in addi
tion to tho restrictions, that are now
applied to banking, and that is, a
maximum rato of interest that may
oo paia ror deposits must bo pro
vided and that'rato of interest should
bo so low (I will say not to exceed
three per cent) that safety will be
the Inducement to the depositor to
place hiB money in bank.
Advocates of the postal savings
bank system estimate largo sums of
monoy that would be drawn from
hiding and placed on deposit. In
every caso at a rate of interest as
low as that which I havo mentioned
or lower. The usual rato contem
plated is that paid by the govern
ment itself upon its obligations,
showing that in the idea of the postal
savings bank tho dominant thought
and tho leading inducement to tho
depositor is absolute safety for his
funds. I have no doubt but what
a guarantee fund that would provide
that degree of safety; that would in
spire tho confidence of - the people,
would bring from hiding large
amounts of money without any rate
of interest; but a small compensa
tion, say two or hree per cent, would
be fair. The increased volume of de
posits that we havo every right to ex
pect would follow as a result, would
in a measure at least make some re
compense foe the tax levied to pro
tect them.
Fixing a low maximum rato of in
terest would take from the reckless
and improvident banker the opportu
nity to use a weapon tho careful,
prudent banker has a right to fear,
that is, tho opportunity to buy do
posits at any price.
Tho establishment of a guarantee
fund either by state or national
banks, in my opinion, without a pro
vision of this kind, would be in.
equitable and dangerous.
Another safeguard that should bo
provided is one regulating reserves.
Under the present law national banks
in reserve cities are required to keep
twenty-five per cent of their total
deposits in cash and with approved
reserve agents. (Except central re
serve cities, which are required to
keep twenty-five per cent in actual
cash.) National banks outside of re
(Continued on Page 14)
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Address The Commoner, Lincoln, Neb.
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Personal To Rheumatics
I want a lottor from ovory man and woman in America affllotcd with
Uhoumatlsm. Lumbago or Neuralgia, giving me their name and address, bo
I can send each one Frmm Jt One Cellar Bottlm of my Bhoumatlo
Romody, I want to convlnoo every Jlhoumattesufterer at ray expenso that
V ? KhOTmatio Bemedy does what thousands of so-called remedies havo
x xauuu yp accomplish AOTVALLV CUKKB ItHMUMATiam.
i"".K opes; I am suro of It and I want every Bheumatlo sufforor to
now a.n1 bo snro ot lfc- tefore srlvlnjr mo a penny profit. Yon cannot
coax Uhoumatlsm out throaeh the feet or skin with plasters or canning
niotal contrivances. You cannot- ltontwltn Unlmsnta. electricity
SSSifJFlSli8' .1R cannot Immgtmm It out with mental science. You
" Br It Out. It l&In the blood and yon must Aftw It
(r.r:i-... irrr --. .- r"m AMUs Is Just what Knhn's Bhoumatlo Bomody does ana
RflmJ.fralfalHeumatlBm lB "to AcM and Urlo Acid and KHha's Bheumatio
uomedy cannot Uve,toethor In the same bleod. rum mummmmttmm a t r am It e9
wouon limbs, and emmped. stiffened, iiseioss Joints. mmH mttrem m qultkly.
w . CAN PROVE IT ALL TO YOU
you win only let me do it. IwlU prove muck tm Omm Wmak. If vm win nniv writa and ask my
ur Kr tw mm wrltm tm urn Inmmillmtmty. VV ' WvA-w
A FULL-SIZED $1mO BOTTLE FREE!
2d wenwatftteiTal0VR.8a?edy; toleani for yourself that Bheumatlsa an be cured
MWeJ7,antBOPro"tonthotrlal A fair test Is aU we ask. IfyouflnditiaoiirliMyoarBhoumatiBm
or NeuraleU. order more to complete your cure nlrBusvrItirh you. that
bus m iwf-sfjrr Battle, .selling regularly at drus-storea for en amtimr ttmmm. Ffcls bottle ia
heavy and we must pay Uncle Sanl to carry AttoyiYmmmLtZMmm mt to vW
postage mailing case land packing and this faU-slSedOnB &to?It.aVm fejTwwMrotJy sent you
OnLVoftftin today and get A One DoUot 3,
ur? .Lt free to afamllyand only feotliose who a" tkm xmrnmntm far mnt . 'rfrl
ntmtm cu., DEPT. D.Y.' HOYHE & NORTH AVES.. CHICAU"
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