Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1893-07-25
MI. Chandier,s Scheme.

Mr.. Chambers Scheme.
We have heretofore several times a.
ludod ~ the scheme of Hon. JEFT. CHAND-
rrr. Of Broadway. New York notice that
II come, from Broadway. where the mono
1aota!ls think all financial wisdom and
kuowlcl-e may be found to prevent
panic. by making depositors as safe as
noteho'ders nov are. Mr.. CANDLE
SAYS:
1t feoms % rne that n perfect system OF gov
Crumert banks ought 10 be- easily devised Tho
present financial furry demonstrates that con-
adcrcc 10 tho essential factor necessary 20 tho
slfoty ot banking institutions. With me govern
mout behind every tank IA the land 'herc would
De absolute confidence. No dopostor would
mink Of Withdrawing his funls-in fact, each
sui every bank would be strong as tho ma
u,nnl Treasury itsclf. Under such conditions
there would 100 no pauios. no financial strinGen-
cy such az now exists. 10 make itself safe tho
Government would need 10 levy a tax Of not
moro than ono quarter Of per cent. on all bank
ing capital and then enforce . rgld Inspector
thi1 that would prevent wr0ug-t0ing on the part
OF bank oGirigl-."
OF course. Mr.. C7ANpLER's scheme is
based upol the assumpton that as there
are no losses 90 thc notehoiders under the
present uatiolal-banbins schcme, So there
would be- no losses % tho depositors under
a proper laW enacted 10 protect these
latter. The country has lost more money
duriu, The Lass few months Gs "a conse-
quooce o. want of confidence IN the
bauk3 ou tlc part of their depo5ltors than
the government guarantee would cost IN
ten years. We say the country has sus-
tanned tuis immense loss. but We might
truly say tlat the banks themselves have
lost moro money during the last few
months Iec.us, the people lacked conf
deucc IN them tlau IL would cost these
same banks 10 ten years TO guarantee the
safety and security Of deposits. In feet,
all our present pacunlary troubles are due
10 the fact that depo5tors IL tho banks
have no assurance that they can ever get
their deposits out Panics cause oil these
troubles. but, Gs Mr.. CHANDLER argues,
there can never Dc another panic after q
banking system shall have been estab-
lisbed which viii create and maintain
thnt confidence which Is the one thing
uoedful 70 a perfect financial system.
Confidence "a the essential factor neces-
tlry to the safety of banking institu-
lions"
Nh CHtNDLER's scheme - endorsed by
Dir. r. H. CAuIrT. Of Stanton, III the
following words:
Tho guaranteeing Of dopositors IN the ma
tlonal BANKS by the government as suggested
~ Mr. Chandler, would protect US against
panics, prevent enormous shrlnkage In values,
and enat.e tho blnEs to discount freely without
fear af at tn,ea"
Under the present system the national
banks are most AFRAID to discount freely at
the very time that discounts are most
needed. As TO the State-bauking system
- be established hereafter. 1t would not
only leave Us without that confidence
which we must have If all panics are to be
done away with. but would be worse than
future. The State has no power to make
anything but gold and silver legal ten
der for debt, and 50 these State bank notes
would be nothing but shInplasters.
We have already quoted Mr.. CHANDLER
on the same point. but as We have before
us copy OF letter from him touching
the fund 1t would be necessary for the
banks 10 raiso annually IN order to save
dcpositors harmless. we will quote his
proposition mother words. He says
fewer banks suspend ,eyou) at the present
time from Gc.ual insolvency OF dishonesty than
from public flight The government has the
power 10 control both, and should exercise this
power. There woall bs no serious itk TO tho
government N the matter a small general tax
on banking capital would indemnify the gov
eminent agalls. any loss not made good by tho
stockholders o. deposltOrs, Il! such losses should
occur m exceptional cases No run on the
banks would Tor could take pacc under this
plan. 1ha currency boing authorized by tho
government, aud the dcpostOrs being finally
guaranteed from loss By tue government, the
fal volume OF The currency Of tho country
would be kept IN circulation up 20 the demands
Tor IT, Hnd Woud not te Withdrawn and hid away
Dy frightened depOsit0rs, as Is now the case IN
periods 0i financial depression, when currency
u most needed"
Mir. CHANDLER knows whereof he nffirms
when lie says that under his proposed sys-
ten only "a small general tax on banking
capital would be needed to indemnify tho
government against any possible losses,
&c.. DC. No noteholder is afraid OF losing
anything under the present national bank
ing system. No noteholder cares whether
tho bank. note he holds Is on broken bank
OF on a sound bank. Isn't il clear case that
If deposltors were as well protected AS
noteholdors they would never lack con-
f.dence IN the banks and panIcs would be
impossible! Isn't IT also clear that q small
general tax would DO all the tax that il
would DO necessary TO levy? Mr. FLANA-
GAN, OF New York. also banker. says
that very light tax on all tho
banks would be a sufficient protection
10 noteholders IN case the law should DO
repealed requiring national banks TO Sc
cure their noteholders by q deposit OF
bonds. AS there are now no losses (worih
speaking of to noteholders. so under the
new system there would be none TO de-
positora Or, as we said IN our last issue.
the CHANDLER scheme proposes TO have no
losses which o small general tax would not
more than meet. and therefore provides
for no other losses.
On the 90th September. 1892. the capt.
tai. surplus. and undivided profits of the
nationsl-ba bank system amounted TO Sl,027.-
or, is4. One per cent. OF this amount
would be about Sio.270.s $40 year--a sum
more than sufficient to pay all the costs Of
protecting depositors. But If It costs twice
as much, the " confidence" secured would
be worth infinitely more. The circulation
is aot included in our figures.
Tho New York Financial and Commercial