Jasper County Democrat, Volume 11, Number 41, Rensselaer, Jasper County, 24 October 1908 — GUARANTEEING BANK DEPOSITS [ARTICLE]

GUARANTEEING BANK DEPOSITS

Democratic Position SoundLandis and Hughes Disagree. THE REPUBLICAN PARTY AND LIQUOR LEGISLATION [From a Speech by Hon. S. M. Ralston at Lebanon, Oct. 14, 1908.] "We pledge ourselves to legislation under which the national banks shall be required to establish a guaranty fund for the prompt payment of ths depositors of any Insolvent national bank, under an equitable system which shall be available to all state banking Institutions wishing to use IL” —Democratic National Platform. • , B

Now it would seem that this plank of our platform appeals so favorably to the people that scarcely anyone puts up an argument against it. Republican orators have, as a rule, up to date, had but little use for any, platform; and I apprehend that no one has any trouble in accounting for the course they have pursued in abandoning the platform of their own party. Governor Hughes of New York, however, has felt that this plank in our platform was growing so rapidly in popularity that some sort of a showing should be made against it, and he has recently therefore attacked it.

And what are his objections to It? I want to state them fairly. He says: (1) “An honest institution complying with the restrictions of the law should not be saddled with the results of other men’s misdeeds.

(2) "It will lead to reckless banking by enabling men without the proper resources to go into the banking business.

(3) "The guarantee fund would take money out of circulation and deprive it of the power to earn interest.” If he has pointed out any objection in addition to these to this plank I have been unable to discover it. Are these sufficient to condemn the policy our party suggests? I cannot recall any restrictive legislation touching commercial matters to which his first objection does not apply with the same force as it does to the proposal to guarantee the depositor against loss. It will hardly do to insist that all restrictive legislation should be repealed because it imposes additional burdens upon honest men.

And how is it as to his second objection? Men cannot organize a banking corporation unless they comply with the law providing for such corporations. They must have the necessary capital—the necessary resources—and the law governing banking should be made so strong that designing men cannot thwart it. If every bank is required to contribute to the payment of the depositors of a Jailing institution, then every bank will become an inspector of every other bank. There would thus be created a spirit of watchfulness from ocean to ocean against reckless banking. So under such a method it would be impossible, when we consider the duties of regular bank examiners, for a bank to go yery far wrong before its assets would be seized by the govern ment.

In his third objection the governor assumes the fund would have to be held as dead capital. The plank in question does not go into detail as to how the fund shall be kept or handled. It simply declares for a principle, and if the principle is sound it will not do to say that the statesmanship of our country cannot devise a rational scheme by which the people can enjoy the benefit of the principle.

Now my fellow citizens, I want to congratulate you that all Republicans do not take the view of the bank guarantee proposition that Gov. Hughes does. One of the most eloquent appeals I have read in favor of a law guaranteeing depositors against loss was made by a Republican. It is true he has not been repeating his speech since his party adopted the Chicago platform, but I am going to give him credit for still holding the same views he expressed in the speech to which I refer, until he repudiates them. The distinguished Republican to whom I refer is?bur handsome and brilliant representative in congress, Hon. Chas. B. Landis. The speech was made* on the occasiompf his last nomination at Frankfort, 4®nrch sth, 1908. I read what he said on this subject:

“I wodld also put into the bill a provision subjecting, all national banks to a small tax to raise a fund out of which depositors who lose money in banks that fail shall be reimbursed. To restore confidence to the people in the banks-—to my mind that is the chief object now. to be attained. The failure of one great bank in New York leads the depositors throughout the country to fear a failure of their local ba«k, and the quiet yet steady withdrawal. of deposits sets in. Soon there are runs, upon the banks ond then there is a panic. If the depositors knew that Uncle Sam had the custody of a fund out of which he could pay any depositor who lost a dollar in a national bank, there would be no run on a national bank. I cannot but think that a provision of this character added to our present currency law would

tlo more to restore Immediate confidence and revive the business of the country than any other that has been suggested. It Is a matter of common Information that the banking associations are liable under the law for twice the amount of their capital stock. Say a bank Is capitalized at $100,000; the stockholders are liable for $200,000. But the bank accepts deposits to an unlimited extent, up to $500,000, Tte« there is one-half of the deposits mA no other guarantee than the Integrity and business ability of the banker. No one can borrow money from a bank, and rightly so, without giving security. No man can be expected to deposit money in a bank without a feeling of absolute security, and if the government provided such a fund as I have mentioned for reimbursement, the depositor would have this feeling of security.

“I am glad to say that there Is not a single national banker In this district with whom I have talked or corresponded, and I have been In touch with nearly all of them, who does not endorse this proposition. They feel that the small -tax that they would have to pay—not to exceed one-eighth or one-sixth of one per cent—would be offset many times by the increased deposits that would force legislation of a similar character for private and state banks and in the end the depositor would have absolute security. This would give confidence to the depositor in the private and state bank, and with full confidence on the part of all depositors, coupled with closer investigation and inspection, I feel that a panic similar to that through which we are now passing would be next to impossible. Thus it is seen, so recent as last March, Mr. Landis favored guaranteeing depositors against loss, for the reasons:

1. It would prevent runs on banks. 2. It would do more to restore confidence and revive business than any other scheme suggested. 3. Because there is no guarantee for one-half of the deposits, as banks now do business, except the Integrity and business ability of the banker. 4. No man can be expected to deposit money in a bank without a feeling of absolute security.

5. Because all the bankers in this district with whom he has communicated on the subject, and he has been in touch with nearly all of them, favor it.

6. The small per cent a bank would have to pay toward the guarantee fund would be offset many times by increased deposits. 7. It would render next to impossible a panic like the one through which we are now passing. I am always amazed at the lucidity with which a Republican can argue in support of a Democratic proposition, when he champions it. Wha| a world beater the average Republican orator would be if he had under his feet a whole Democratic platform. Governor Hughes could state only three objections to this plank, while Mr. Landis without any apparent effort, stated seven reasons—all sound. I submit —in support of it.

Minors Can Buy Whisky. There has not been an election in Indiana since 1892 at which the Republican party did not receive the solid support of the liquor and brewery interests of this state. Anyone calling this statement in question discloses his ignorance or want of sincerity These influences have helped to elect Republican presidents, Republican governors. Republican United States senators and Republican state tickets, and yet Republican leaders have always managed ,to have a smile for the temperance advocate. They have smiled upon him while they have had a hearty hand for the saloon champion. True to their methods in the past, they are now' seeking to make a campaign asset of their party’s liquor legislation, while they continue to hold on to the hand of the saloon keeper.

I am not charging or intimating that there has been no good legislation on the liquor question while the Republicans have controlled the legislature, for such a statement would not be warranted; but I do charge that while the Republican party professes to be the great champion of temperance, its leaders and managers have constantly striven to placate the liquor Interests and hold them in line for Republican tickets. S' ' • >• ' But while I have conceded that there has been some proper legislation on this subject by this party, it does not that all its liquor legislation should be approved. Everyone recalls the demand of the people for blind tiger legislation at the last regular session of the general assembly of our state, and that it was at that session that the law. known as the blind tiger act, was enacted. Section 13 of that act relates to sales of liquor by druggists and makes it unlawful for a druggist to sell or give away intoxicating liquor, except on the written prescription of a reputable physician engaged in the active practice of .his profession. This act was approved Feb. 13, 1907. Jt proved to be an unpopular act. Druggists and liquor men generally denounced dt and the leaders of the Republican party hastened to make peace with them. To appease their wrath the same legislature enacted the law known as the Beardsley act, which contains no emergency clause and ■ft’hich was approved and went tn force March 16, 1907—one month and three days subsequent to the approval of the blind tiger act.