[Volume XXV
THE CHICAGO BANKER
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Ey d i i o r i a l Comment
tion and the Vreeland additions and amendments avoided. Dispatches from Washington indicate that “official study” of the returns of bonds held by national banks led to the conclusion that they were widely enough distributed to permit the banks to get out all the ‘additional circulation” they might desire without forming “national currency associations.” “Well-informed officials” were represented as predicting that in view of “the difficulties that have been thrown around the issue of the notes through these associations,” there would be no resort to that method, and as saying that “for practical purposes” the Aldrich-Vreeland act is “no more than permission to banks to put up certain kinds of bonds with the department and get out notes thereon subject to tax.”
This is where Senator Aldrich holes out with his mashie. Isn't it just as he intended it to end? Wasn’t the bill so framed up that the “inspired" end of it is the only part of it that will work? Uncle Sam has his stage money as yet in the vaults.
W
Is it a Sectional Issue?
It is believed in W ashington, where officials of the comptroller’s office and of the treasury department are being asked daily for statistics bearing on the subject, that guaranty of deposits is becoming a sectional rather than a partisan issue. Last winter there was a constant demand for legislation providing a guaranty system applied to the national banks. This demand came largely from the West, South and Middle West, and was voiced in vigorous terms by congressmen, some of whom were of the “conservative" school of thought. It was the feeling of these men that the sentiment of their communities strongly favored the guaranty plan. President Roosevelt’s well-known friendliness to the idea strengthened the movement and it had at one time an excellent chance of going through congress. In the opinion of many persons, the fact that more than anything else tended to defeat it was Mr. Bryan’s advocacy of the idea, and the personal interviews in which he pressed his views upon members of the house and senate. 1 his had the effect of making some republicans less ardent than they had previously been before they learned that the deposit guaranty was a Bryan policy, while even the president was said to have moderated his ardor in behalf of the proposition. Nevertheless, there were many plans for guaranty before the house and they came both from republican and democratic members. The Fowler bill itself contained a rather elaborate guaranty plan which was indorsed bv some leading men before the committee on banking and currency. That plan, however, was finally made one of the grounds on which the Fowler bill was attacked and vilified by some of the “conservative” congressmen who opposed its passage. W hether they would be willing to change their position now and accept a guar-
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Problems of the Presidential Campaign
The present political campaign has problems differing from most of those in the past. The manager of each of the great parties is confronted with many serious problems. In a nutshell, Chairman Hitchcock must determine before he can arrive at a definite and safe conclusion as to the outcome of the campaign:
What will be the effect of the business and industrial depression upon Mr. Taft’s prospects?
How many electoral votes are endangered by the threatened disaffection of negro voters ?
How much influence will Samuel Gompers exert with republican members of the American Federation of Labor?
What will be the effect of the political inertia of the great railroads?
To what extent will the idea prevail that tariff revision might be delayed if the next President and House of Representatives are democratic ?
Chairman Mack must find the answer to these questions, among others:
How close will be the disaffection among democrats from Mr. Bryan by reason of the Independence movement ?
To what extent will Mr. Roosevelt’s personality prevent republican radicals from deserting Mr. Taft?
What will be effect upon Western radicals in the democratic party of Mr. Bryan’s reconciliation with the old-line, wealthy democrats of the East ?
What influence will the posthumous letter of President Cleveland exert among the conservative element of the party?
Will the business interests be as unfriendly generally as they were in 1896 and 1900?
And Hitchcock and Mack can sing in unison:	"Where will We Get the Money?”
Even the bankers resent their treatment at the hands of a republican senate and house, when their carefully prepared currency bill was refused even a chance to win. Snubs and subscriptions do not go hand in hand.
N?
Emergency Currency Made Easy
Now that the banks have not organized the national currency associations, as provided for in the Aldrich-Yreeland bill, the open work of the act is to be tried out in the Aldrich direc-
Bank Deposit Guaranty
It is not safe to take a radical position upon any question, much less a financial or economic one, without first taking note of all obtainable information. There are degrees, too, of bank deposit guaranty, as well as of postal interference in banking lines. The Oklahoma plan, for instance, is for state banks only and not for banks of issue. Therefore its limitations. In Oklahoma the bank depositors’ guaranty fund is administered by a state banking board composed of the governor, the lieutenant-governor, the president of the state board of agriculture, the state treasurer and the state auditor. This board is authorized by law to require all state banks to pay into the fund an amount equal to 1 per cent of their daily average deposits, excepting deposits of the state and national governments, which are specially secured. Banks hereafter organized are to pay into this fund an amount equal to 3 per cent of their capital stock. The expenses of administration are paid from the fund.
The banks making these required payments are entitled to a certificate that security to depositors is guaranteed by the depositors’ safety guaranty fund of the state of Oklahoma, which statement is to be conspicuously displayed in the banks. Whenever the fund falls below an amount that is less than 1 per cent of the average daily deposits of all the banks involved the board is to levy on the banks a special assessment sufficient to make good the depletion. Under this provision, which appears to be without limitation, it would seem that if half the banks should fail all the assets of the other banks might be levied upon to make good the losses to depositors of the failed banks. Of course this is begging the question.
The idea of being compelled to unite, to stand or fall, with the others is repulsive to most well established bankers. To those who are influenced by the theoretical the plan has greatest appeal. It is said that the success of the Oklahoma law is already demonstrated, that deposits are increasing because of the guaranty and that banks in adjoining states, where the guaranty does not prevail, are losing their business. The benefits of a law of this nature are most obvious at the outset; the actual disadvantages manifest themselves only after a considerable time. No plan of this kind can be said to have been tested until it has stood the strain of a financial crisis.
Bankers in Kansas have tried, in self defense, to have a guaranty law passed. Both democratic and republican parties in Kansas have declared for the guaranty, and Stubbs, the republican candidate for governor, is the owner of a number of banks. Self interest is only one of the points of view. It probably controls tariff views, but should not banking questions be decided upon higher grounds?