Joseph A. Schumpeter · 1910
Schumpeter’s review situates Lansburgh’s proposals within contemporary debates about the regulation of banks’ use of entrusted funds:
Diese Aufsätze — Sonderabdrücke aus der «Bank» — behandeln einige sehr aktuelle Fragen der Bankpolitik, im Anschluß an Anregungen, die die Bankenquete geboten hat.
English translation: These essays - offprints from "Die Bank" - treat several very topical questions of banking policy, following upon suggestions offered by the banking inquiry.
The review moves from an exposition of three essays to a reservation about their common rationale. The first essay makes the distinction between deposits and savings central to public understanding and legislation. Lansburgh proposes using commercial and criminal law to discourage banks from attracting savings, while rejecting restrictions and supervision for deposits proper. The second contrasts small savers’ presumed preference for government and municipal securities with savings institutions’ allocation of funds to land credit and, partly, speculative investments. This discrepancy supports Lansburgh’s argument that government intervention will eventually become unavoidable. The third essay advocates minimum holdings of German imperial and state bonds, frequent and informative balance sheets, and a supervisory office.
Schumpeter acknowledges the proposals’ practical prospects:
Manche dieser Vorschläge werden ja sicher verwirklicht werden.
English translation: Some of these proposals will certainly be realized.
Expected adoption, however, does not resolve the conceptual issue. Schumpeter questions Lansburgh’s premise that the owner’s will should determine the investment of money and that regulating the use of others’ funds constitutes the problem’s central point. The principle’s apparent plausibility makes it potentially dangerous: converted into a slogan, it could carry intervention further than Lansburgh intends.
The review supplies no alternative regulatory programme. Its distinctive contribution is to separate particular safeguards from the principle invoked to justify them. Schumpeter’s caution concerns the distance between a persuasive demand to respect owners’ intentions and the wider political consequences of making that demand a governing formula.
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