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THE CHICAGO BANKER
September 12, iço8]
Federal Guaranty of Bank Deposits
would involve the government carrying on the complicated machinery of commercial credits and exchange, and do away with our system of banks. If this is being inefficiently accomplished by those who have had life training in banking, it can hardly be less so when handed over to those who would receive appointments for political considerations without special qualifications for the duty to be performed. The business interests of the country would certainly disapprove of this, and there can be little doubt that commercial and industrial enterprise would be paralyzed by the attempt. Instead of this it has been soberly
James I. Buchanan, President of the Pittsburgh Trust Company, before the Pennsylvania bankers at the Bedford Springs Convention.

govern too much may result in a diminution or elimination of what it is thought to govern.
The logical way to get federal guarantee of bank deposits is for the government to become the great banker and the custodian of the savings and working capital of the people. This
JAMES I. BUCHANAN Pittsburgh
So much has already been so admirably written and spoken on the subject of the guarantee of bank deposits, arguments on either side of the subject of the federal guarantee of bank deposits may involve repetition, and our present discussion will likely be to some extent at least emphasis of statements already made.
There has been such an expansion (and some of it though desirable yet hardly warranted by tradition or law) of paternal, protective and supervisory powrer to the actual disregard of individual initiative and even the personal and contractual rights granted by the constitution of the United States, our system of government has come to appear in some particulars more like a monarchy than a republic, even at the hands of that great and respectable section of our community who have professed to be unalterably opposed to paternalism in every phase and form.
Much of the discussion hitherto of the subject of the guarantee of bank deposits seems to have proceeded on what amounts to a theory that banks are benevolent institutions, or at least institutions established solely for public benefit, instead of personal enterprises primarily for individual gain and at the risk of private capital.
In business it is conceded that those who furnish capital are to their creditors and to the public, guarantors against loss to the extent of their capital and their personal reputation and they are entitled to control.
The vast majority of the banks in the country have, through honest and sagacious management, created a valuable asset for their stockholders and their patrons in the good-will of those who do business with them in the communities where they are established. Our courts have ruled that “good-will” is property and of money value. Property cannot legitimately “be taken for public use without just compensation,” nor should it be destroyed or rendered valueless by act of Congress.
While banks are used by the public and have become a vital part of financial and business machinery, they are nevertheless private enterprises in the real sense that they are made possible by individuals and their private capital.
In proportion to the importance of banks, as a vital part of business machinery, legislation should be directed toward and not against the encouragement of their organization. Probably no one will question the duty of the government in giving corporate privileges to establish a general code of procedure and business morality that will protect the rights of individuals interested as stockholders, as betw׳een each other, and as well as those of others with w hom they in their corporate capacity do business, nor the duty of the government from time to time to see that such code of procedure and business morality is complied w־ith, but if restrictions, responsibilities, and liability for expense are imposed that banks cannot meet or control, the inevitable result will be that individuals will seek more profitable channels for the use of their capital, and in which they will have more freedom of judgment and control. We may see the retrograde movement of resumption of private banking and the consequent lack of publicity.
A thing to be feared is that an effort to