New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-11-12
PROPOSED REFORMS IN BANKING

lue report tllG tOmuDJlce 10y
the New-York Clearing house to ascertain
what reforms are necessary for the greater
security of the banking business of this city
is clear and convincing document. AS the
result Of their Investigations into the evil prac-
tees which, cooperating with other causes,
eliminated two months ago in panic, the Com
mttee report six rules. They recommend that
any bank violating any one of them shall be
excluded from the Clearinghouse Association
We can add nothing to the cOgency of the
facts which support the conclusions OF the
Committee, and need only say that we hope
the rules will be adopted and vigorously en-
forced. The proposed regulations are as fol-
lows:
l. No bank shall pay, or procure TO be paid interest
upon deposits.
Fifteen years ago, after the panic of 1851
the bank officers of this city came to the same
wise conclusion but the rules then laid down
do not appear to have been lived up to. At
any rate twelve large banks, by paying in
terest on their deposits, had succeeded the
present Summer in obtaining about One-hdt
of the whole amount deposited in the sixty
Clearing house banks of this city. These
twelve institutions, by the assistance of all
the other banks in the Association, have been
with difficulty saved from absolute bank
ruptcy. The figures show that of $l11,6OO,0O0.
being the average amount on deposit with
twelve interest-paying banks for the ten
weeks from July to Sept. O. inclusive, no
less than S5s.9OO,OOO, or about .ffty-hree per
cent, were withdrawn before and during the
panic. Without the assistance of the other banks
not one-balf this sum could have been paid.
Had these immense liabilities, payable on
demand, been protected by a safe reserve, the
nature of the deposits being taken into the
calculation, the deposits for which interest
was paid would have yielded no profit. But
security was utterly disregarded. The
reserve maintained was far, very far, from
being safe one. The material was prepared
for a tremendous explosion, and, in spite of
all the assistance rendered by the more pru-
IDENTIFY conducted institutions, the country,
from Maine to Texas and from NewYOrk to
Salt Lake City, is covered with the fragments
of shattered fortunes
The example of the London joint stock
banks, when rightly understood, is far from
cOuntenancing the practice which has been 80
greatly abused in New-York. Our banks, in
so far as they keep the reserves of the
National banks outside of NewYork, resemble
the Bank Of England But while in New
York the reserves of the country banks have
been attracted to few large establishments
by the offer of interest, and, in the absence of
any legitimate business demand, employed to
further Wall Street speculatiOns, no interest
on deposits is ever paid by the Bank of En-
gland While in New-YOrk such deposits
have been protected by reserve OF from
fifteen to twenty per cent, the Bank of
England has protected itself and its depositors
by q reserve of from thirty to fifty per cent
Again, the London joint stock banks,
which also guard themselves by certain
reservations and conditions from the sudden
withdrawal of the moneys left with them at
interest, keep large proportion of their
assets in the shape of marketable securities.
In New-York, there is far less dependence to
be placed OH the market for securities than Is
the case in Europe. This fact is well illus
trated by tho calanitous failure of the Union
Trust Company by reason of its inability TO
dis,ose Of q million dollars worth OF United