, 1888-07-25
SAFETY FOR DEPosiToRs.
Banks to BE Insured Against All Loss.
Novel Financial Scheme.

Banks to BE Insured Against III Loss.
Novel Financial scheme.
Early last winter the Depositors' Guar
antee company of America was organ
lied under the laws of West Virginia and
a charter was granted to the corporation.
The capital stock of the is
So, 200, 600, divided into shares of 800
each, and its object is to guarantee de-
positors in national and state banks
against loss from any cause whatsoever.
The incorporators and officers of the
company are among the most prominent
~tinanciers of the country, who believe
that the new financial institution, while
it is an innovation in banking affairs,
will ultimately become one of the most
powerful and beneficent corporations for
the protection of both banks and depos-
itors in the world.
br. Serbia described in detail the OBJ
jects of the new concern. at was" he
said, ''intended to absolutely insure the
solvency of state and national banks by
forming a combination of banks for self
protection through this corporation. AS
a measure of the guarantee principle,
l 1000, 900 of the capital of the company
will be deposited with the treasurer of
the United States at Washington, and
such amounts in bonds with the proper
officers of the various states as the laws
of such states may require. Already
1000 of h most prominent banks in the
United States have signified their inten-
ton of becoming stockholders and having
their deposits guaranteed by the com
pany. These banks have agreed to pay
the company one-fifth of 1 per cent. an
nually upon their gross deposits, which
give a yearly income over estimated ex-
penses of about $500, 600.
In every banking center of the com
pany there will be a competent bank ex-
aminer, who will make a thorough ex-
animation of a bank before a policy will
be issued to it, and the bank examiners
of the company will have the right to
examine any bank included in the guar
antee at any time during the year with
out any notification to its officers and di-
rectors, Upon the delivery of a guaran-
tee the company will have an advertise
ment, to run for a period of six months,
inserted in the leading newspapers in the
locality of the bank bearing the n~otiica-
ton that all ~depositors in that bank are
guaranteed against loss, and that in the
event of the banks insolvency all depos-
its will be paid in full by the company,
with interest. The company will start
upon "A sound financial basis and with
abundant resources, for not n guarantee
will be issued until the guarantee fund
of So, OO0, 900 has been paid in in cash.
No bank will be guaranteed unless hold
ing stock in the combination. The char
ter calls for a lease of fifty years, with
power to extend"
In discussing the merits of the scheme
MIR. Serbia called attention to the fact
that there could be no such thing as a
run on a bank or a panic among a circle
of banks which are in such a combina-
ton, for with the guarantee fund of
So, 000, 600 behind them all demands
could be promptly met. There was no
way in which the company could lose
anything by guaranteeing n banks de-
post eventif it paid its losses. In case a
bank were in temporary difficulty, he
said, and needed a large sum of money
to tide it over a crisis, the Guarantee
company would advance the needed
money, taking as security sufficient of
the collateral assets of the bank to cover
the loan, which should be returned to
the bank upon the loans redemption. A
million dollars in cash would be kept
available to meet any such emergency
that might arise. Mr.. Serbia believed
that the constant supervision over the
banks exercised by the Company's exam
liners would almost entirely do away with
defalcations, and by raising the standard
of bank employees save the thousands
upon thousands of dollars now being an
nually lost by compromising with dis
honest ofiicials.-New York Times.