Jasper County Democrat, Volume 13, Number 79, Rensselaer, Jasper County, 18 January 1911 — THE DEPOSIT GUARANTY. [ARTICLE]

THE DEPOSIT GUARANTY.

In the course of its comment on the recent decision of the supreme court upholding the guaranty laws of Oklahoma, Kansas and Nebraska, the New York World says: Bankers and boards of bank directors are themselves responsible for the discredit that has made free banking a public danger. We have had proof enough in this city withw in a few years that better safeguards ‘ are needed by depositors than are afforded by dummy boards of directors and casual state examination. The deposit guaranty law of Oklahoma may be economically undesirable in the long run, but the people out there deem it necessary and the supreme court upholds its constitutionality. It will be well for bankers in all parts of the country

to heed the lesson. Not in the west only do bank depositors wish a guaranty that their money is safe. At the present moment certain great bankers of New York city are practically guaranteeing the deposits of three or four crippled institutions. It is said that there is no danger that the depositors will lose anything, yet as there are thirty thousand of them, and as they live on the east side, it is feared that “some might become frightened and cause a stampede.” So J. P. Morgan & Co. are to “guarantee” the deposits of one of these banks. Now we do not argue from this in favor of the Oklahoma system. But the case does prove that if there Were an absolute assurance, as far as this could be given, that the deposits were safe there would have been no possible reason to fear a panic or stampede, no need for Morgan to play the part of providence once more.

At least all this proves that the >Vorld is quite right when it says that “not in the west only do bank depositors wish a guaranty that their money is safe.” For they seem to wish it even in New York city—or at least the financiers find that it is necessary to give it. Nor is there anything unreasonable in the demand. 7 Secured debts are no new things? And people who ask for security are not usually regarded as extraordinary. Bankers, as a rule, are ather stiff in their demands for collateral. But it is only when the depositor asks for security that security becomes populistic and socialistic. The supreme court, however, is of the opinion that the states should, have large liberty in dealing with the banks, which, of course, is the true view. Banking is at least a semi-public business, and the state has always assumed the right to regulate it. Many mistakes have been made, and much of our financial legislation has been made, and is, foolish and bad. But nevertheless, there must be power somewhere. We think that much reliance may be placed on self-regulation of the banks, under wise laws. But some laws there must be, and among them it is not unlikely that we shall have some sort of guaranty law—

not the Oklahoma variety, perhaps but still ere that will coniplejely protect- the depositor. This idea is not treated in the light way that it was a few years ago. On the contrary, men are beginning to see that there may be some merit in it. The question is before the country for consideration and discussion. In the meantime we can all study the dperation of the scheme in those states which have adopted it. If it Works well, or if it seems probable that it would work well if modified somewhat, the plan is certain to be widely adopted.—lndianapolis News.