[Volume XXVII
THE CHICAGO BANKER
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STATE BANK OF CHICAGO			THE FARMERS’ AND MECHANICS' NATIONAL BANK OF PHILADELPHIA, PA. 427 CHESTNUT STREET Capital $2,000,000.00 - - ־ Surplus and Prolits 1,348,000.00 ORGANIZED JANUARY 17, 1807 Dividends Paid $12,847,000.00 ־ OFFICERS Howard W. Lewis, President Henry B. Bartow, Cashier John Mason, Transfer Officer Oscar E- Weiss, Assistant Cashier ACCOUNTS OF INDIVIDUALS, FIRMS, AND CORPORATIONS SOLICITED PRESENT NUMBER OF STOCKHOLDERS 930
ESTABLISHED 1879 S. E. Corner La Salle and Washington Streets Capital - - $1,000,000 ־ Surplus and profits (earned) 1,400,000 Deposits - 20,000,000 OFFICERS L. A. GODDARD, President FRANK I. PACKARD, Asst Cashier JOHN R. LINDGREN, Vice-President C. EDWARD CARLSON, Asst. Cashier HENRY A. HAUGAN, Vice-President SAMUEL E. KNECHT, Secretary HENRY S. HENSCHEN, Cashier WILLIAM C. MILLER, Asst. Secretary			
YOUR CHICAGO BUSINESS RESPECTFULLY INVITED			
			
A IN CINCINNATI ▲, With Resources of TWENTY-ONE MILLION DOLLARS And every facility for the satisfactory handling of Bank Accounts SmHr CORRESPONDENCE INVITED			
John Schuette’s Open Letter to Senator Owen
any injustice to any bank to require it to contribute to a fund to cover losses, when no losses will occur?” Feeling he was cornered, he admitted that so long as banking business continues there will always be some suspension of banks. Realizing his discomfiture and seeing himself deserted by his fellow bankers, he beat a hasty retreat and withdrew the resolution.
That the large and successful bankers are opposed to deposit insurance, is but natural, as all bankers would then be on a common level as far as credit is concerned. These are the ones who are heard most at conventions. Anton Schaffer, superintendent of banks of Minnesota, in an able article in the New York Chronicle, entitled: “Deposit Insurance Must Come,” calls attention to this fact—that the discussion at bankers conventions does not disclose the real sentiment of the bankers, as such conventions are usually dominated by a few large bankers who oppose the measure.
But even these objectors do not deny that insurance of deposits will protect depositors, but they deem it beneath their dignity to be required to do so, although they themselves require it from their customers. They lay great stress upon the argument that it would be unjust that the strong should pay for the weak. They do not seem to consider that we all are paying more in taxes or insurance premiums to make good the loss caused by wrong doing, or happening through the misfortune of others.
Deposit insurance is really insuring the bank’s assets, received from the depositors, and also its own deposits in reserve for other banks. It is only a step further than the banks are doing now, when they insure against fire, burglary and embezzlement of officers. In all this insurance they must pay their share for the wrong doing or misfortunes of others, and incidentally their depositors are thereby also secured.
The sa^e of Manitowoc tells the new convert to deposit insurance of some of the pitfalls for the unwary — He also slips in a word for postal savings banks
the people, and of the majority of the bankers as well. Do not be discouraged because a single banker tries to condemn and ridicule the plan, for only a few large bankers, a mere corporal’s guard, are with him. Three-fourths of the medium and smaller bankers, and nearly all the people are with you.
Personally I prefer a national law which will be the same in every state and will inspire more confidence. But, since the national bankers seem to oppose the plan so strenuously, and are so short sighted about it, why, leave them out in the cold. If compulsory insurance should encounter such strong opposition as to endanger its passage, pass an enabling act, and state banks will soon seek its protection. This will silence the opposition which unlimbered its batteries against you, as in the following preamble and resolution: “That the taxing the good to pay for the bad, to tax knowledge to pay for mistake, lack of training and ignorance, is unsupported by any theory of political experience save that of the socialistic; therefore we oppose any plan of insuring deposits.”
In support of this, one of the bankers stated that insuring deposits would be unjust, that it would lower the standard of banking, that it would lead to wildcat banking that the desired results would be better attained by wise legislation and more rigid inspection. Right here the opposition exposed its weakness and gave you a chance to strike the fatal blow. You very effectively took advantage of this when you asked, “you assume then that we can pass laws that will practically do away with bank failures? If so, how would it work
To Senator W. C. Owen, Maiden Rock, Wis.
My dear Senator: When I read in The Chicago Banker your very able address on “Deposit Insurance” delivered at the Wisconsin bankers convention held on board the steamer, while rocking on the bosom of old Lake Michigan, I was reminded of my first venture along the same line. I launched this subject at a Wisconsin bankers convention in Milwaukee over a decade ago. At that time I was not given an opportunity to knock out any opposition or criticism such as you were favored with. I suppose this was because the subject was considered so vague and visionary that it was not deemed worth while to discuss it. I predicted then that if the bankers would not insure their depositors the government would do it for them, and this prediction is now on the way of being realized in the form of postal savings banks.
But I was not discouraged. I kept pegging away, at conventions and in the press, and wherever opportunity presented itself. The demand for more detailed arguments induced me to prepare and issue a booklet, showing the losses from the time the national bank was established, and containing the draft of a bill to be enacted, and also other arguments in favor of the plan. This booklet was sent broadcast to bankers throughout the country.
In 1905, E. B. Cockrell, cashier of the First National of Hennessey, Oklahoma, wrote me for a thousand copies of the booklet, which he intended to distribute in his state. I sent them, but I fear he may regret having distributed it, as the state adopted the plan but barred him, as a national banker, from its benefits. The decision that a national bank cannot avail itself of the insurance feature seems to me very unjust.
Now, if you continue to advocate deposit insurance as you have started out, persistently, constantly, and earnestly, you not only will succeed, but will be entitled to the thanks of