The Dallas daily herald. [volume] (Dallas, Tex.) 1873-1887, 1885-10-15
sEcURITYFoR BANK DEPOSITS,

SECuRlTyFo BANK DEPOSITS.
notwithstanding the several ocjec-
lions that have been urged against
the national banking system of this
there is one feature that is
and perhaps past improve.
ment, and that is the absolute secu-
rlty had by the note-holder. II now,
to this could be added perfect secu-
rity tor the depositor, then the system
would bs the best the world ever saw.
To attain this plan has bsen pro-
posed by Mr.. w. W. FLANAGAN,
cashier Of the Commercial bank, OF
New York, in q paper re-
Gently read by him before the
Bankers Convention at Chicago.
His plan, briefly stated, Is that the
taxes each year paid on circulation
shall be hereafter held and kept by the
treasurer OF the United States as sep.
arate and distinct fund a. n guarantee
deposit fund. When this sum shall
amount TO as much as s20,0OO,0l0 at the
end OF any semi annual period, then
the semi-annual tax on the oirculat-
ing notes shall be imperative until the
fund in question shall be reduced be-
low the sum OF $l5,OO0,0OO.
Whether the country can stand
the loss OF the tax heretofore re.
ceived from this quarter il a
matter for the appropriate con-
gressional committees to determine.
On examination we find that the
amount OF such tax paid by the ma
tional banks since 1865 has amounted
to very nearly S6o,O0O,00O. The claims
proved against the banks IN the same
peri ID amount, in rnund numbers, to
$iO,0DO,0OO. The losses sustained will
reach about $40 900, 600. In other words
the taxes paid on circulation exceed
by 80 per cent, the total amount OF
proved claims. Thus, If the insolvent
nationsl banks had had no assets
whatever, tho tax, AS proposed, would
have paid all their depositors, and lot,
some $40 10000 in the treasury. IL ap-
pears also that the taxes paid ON
circulation arc about six times the
losses by the banks. Under such al
arrangement as this, 1t does seom that
the problem OF positive security ha'
been solved. To further facilitate
matters, Mr.. FLANAGAN, az we un,
derssand HIS scheme, proposes that
the fund in'exoess Of 81, 100000 shall b,
invested by the treasurer in Interest.
bearing bonds Of the United State,
and such interest shall bs added to the
principal fund.
There are some objections to the
plan thus generally outlined
which will appear to the
banking Intellect but OF
the whole it seems feasible and
desirable. The deposit, as proposed
wouldbe assafe safety fund AZ bond,
upon which tho notes for circulstion
are secured. Andit may be that IL
Wow OF the panicky feeling aud con
sequont evil results that are 80 often
produced to the general detrimenl
and disarrangement of affairs by the
failure of bank, 1t would be we'll &c
insist on this or similar security 10
bank depositors. Under the present
law, tho citizen, as an individual, lose,
his pro rata of the entire loss, Will,
under the above scheme tho govern
ment would be- the loser to the extent
OF tho tax reduction as might b.
absorbedlby such loss. We can further
more understand that private bank
might seriously suffer, al
every depositor would prefer
to place his moneys where sucl
thorough security 10 offered. At any
rate the scheme Is not only novel but
Interesting, and worthy OF investiga
tion by the financial lights ofthe conn
try, aud by Congress- as well. Tho orig
inator is a young gentleman who ha'
already gained considerable eminence
in the world of finance through hi,
experience aud hon0rod connection
with leading banking institutions ant
questions in Virginia and elsewhere 1,
the South.