In the stress of the recent banking crisis ... there was a very definite appeal from bankers for the United States Government itself to insure all bank deposits so that no depositor anywhere in the country need have any fear as to the loss of his account. Such a guarantee as that would indeed have put a premium on bad banking. Such a guarantee as that would have made the Government pay substantially all losses which had been accumulated, whether by misfortune, by unwise judgment, or by sheer

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... klessness, and it might well have brought an intolerable burden upon the Federal Treasury. -Sen. Robert Bulkley (n-OH), Address to the U. S. Chamber of Commerce, May 4, 1933.' The only danger is that having learned the lesson, we may forget it. Human nature is such a funny thing. We learn something today, it is impressed upon us, and in a few short years we seem to forget all about it and go along and make the same misiakes over again. -Francis M. La~•v(1934), p. 41. 'Quoted by Sen. Murphy (D.IA) in Congressional Record (1933), p. 3008. This paper is organized around the major themes of the debate: the actuarial questions concerning the effects of deposit insurance, the philosophical and practical questions of fairness to depositors and of depositor protection as an expedient means to financial stability, and the political and legal questions surrounding bank chartering and supervision. Much of the debate 2 The Federal Deposit Insurance Corporation (FDIC) has recently announced a move toward risk-adjustment of its insurance premia. 3 The Act is often called the Glass-Steagall Act. It is referred to here as the Banking Act of 1933 to avoid confusion with the separate Glass-Steagall Act of 1932. Significantly, it also has the longer official title: "An Act to provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other purposes." The temporary plan was later extended, and the permanent plan delayed, for one year (to July 1, 1935) by the Act of June 16, 1934. The Banking Act of 1935 substantially emended the permanent plan to resemble closely the temporary plan. See the shaded insert on page 72 for further details of the various plans. 4 The Federal Reserve did not adopt an official position, although there is some evidence of opposition: "Deposit guaranty by mutual insurance is not part of the Presidential program, nor is it favored by Federal Reserve authorities," "Permanent Bank Reform" (1933); see also Kennedy (1973), pp. 217-18. Comptroller O'Connor favored deposit insurance; tormer Comptroller Pole opposed it. 5 The Senate did not record a vote, although even Sen. Huey Long (D-LA), who had been a flamboyant detractor, rose to speak in favor of the bill. Cummings (1933) claims that the Senate vote was unanimous. The House dissenters included Reps. McFadden (R-PA), McGugin (R-KS), Beck (R-PA) and Kvale (Farmer/Labor-MN). See "Congress Passes and President Roosevelt Signs Glass-Steagall Bank Bill as Agreed on in Conference" (1933), p. 4192. Rep. McGugin's request for a division revealed 191 ayes and 6 noes; a quorum of 237 was reported present; Congressional Record (1933), p. 5898.