Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1874-10-18
A RUN ON THE BANKS.


Here is a sensible article from the New
York Bulletin, which every sensible
man must indorse:
What are the means for preventing a
run on the banks? As banking is now
conducted, no one wilLquestion the right
OF depositOr to demand @ return of
his funds on the instant. The banks
have received the deposit on condition
of instant payment, aud while that is
the case, no one can complain against
the deposition demanding his money
when he chooses. But the mistake lies
in the banks having committed them
selves to return the deposit ~ cash at
any moment when il may be demanded.
Experience hiss demonstrated that De-
RODS occur when they cannot pay all
their depOsitOFs, nor even one in four of
them. 1t is absolutely incompatible
with their business as bankers to keen
an amount of cash on hand sufficient to
liquidste their deposits on the ms ant.
II depOsitOrs insist upon that condition,
the banks can have no advantage in
holding the deposits, for they cannot
use them. If the banks accent that
condition, they commit themselves TO
sn engagement which they know they
will some day be unable to fulfill. Their
contract to pay deposits on demand is
therefore q sham and delusion; IL in
variably breaks down in times of great.
est exigency, and is consequently a
compact which should not be recognized
as morally fit II come within the
scope OF baking arrangements.
1t is time the banks established
relations with their depositors which
reserved to them the right, in times of
eXigeDcY, Of exercising their
as to the payment OF currency
against deposits, and giving them the
option OF issuing to depOsiuOrs either
certified checks ''good at the clearing
house," or clearinghouse certificates;
such eXpedIents to be resorted to only on |
3 general agreement between the banks.
and 10 be continued for 50 long as the |
special occasion might, in the judgment /
d the clearinghouse, appear necessary,
This would be but a candid acknowl- /
sdgement Of the limit to which the
banks can possibly pay depOsitors On
iemand; and it would deprive panics of I
heir chief element of vitality. The
public would know that the banks
,ould not be broken by ''run," and
here would, therefore, be no "ruuu
lpon tnemi ana yet there would be no
deprivation TO the public Of the neces-
AIRY nesns of effeeting settlements, al
hough the kind Of instruments to be
lsed in settlements would be Temporal
lily changed. The banks would then
resent solid 'front.' against the storm of
popular excitement; they would be in
,osition 70 support all needing help;
hey could protect their customers; the
Of finance, though partially
leranged. would be kept ia running
'onditioni panic proper could make no /
and the public mind being
.ept cool and free from needless appre-
tension, the crisis would be dealt with /
iscreetiy and upon its merits. 1t Is I
My false feeling Of delicacy that Ii
you'd prevent the banks fiom thus {
aeing the truth and acknowledging {
Ghst is possible to them and what inn :
ossible. In truth, however, they would '
ct most eommendable example to the {
anking world in thus putting them /
elves in readiness for the next panic, Z
lhenever it may come. {