The representative. [volume] (St. Paul, Minn.) 1893-1901, 1893-10-11
GIVE US GOVERNMENT BANKS.

GIVE US GOVERNMENT BANKS.
II the Governments Must Guarantee the
Circulating Notes and Deposits. Why Not
| Do the Banking.
l. As private banker, it was natural
that my first judgment was opposed to
the idea of guaranty of deposits in
national banks by the government.
After careful consideration, how
ever, I take the other side. At the
risk of repeating what has already
been done in your columns, 1 send you
my reasons.
Deposits would be absolutely safe.
The destruction of our national exist
ence would have to occur before the
guaranty could fail. No private cor
poration could give a guaranty that
would be reliable in times of business
depression. There would be no runs"
Money would be safer in banks than
anywhere else. Deposits would be
largely increased, how much no one
can say, but it is probable that in the
aggregate they would soon be doubled.
Not that the money outside of banks
equals their present deposits, butsthat
Is per cent. of the new deposits could
be loaned and the proceeds would
largely appear again as bank deposits
That but small amount of the money
of the country, amounting to s1,6oO,-
900, 600, is now in bank, is shown by the
report of the comptroller of the cur
rency. July IL the national banks
held 50 less than $500, 900, 900 of specie
and legal tenders.
The people would derive much more
benefit from such law than from the
enactment of the English postal saw
ings bank system, which would draw
large amounts from active circulation
Such an act would solidify and inn
prove the banking system of the coun-
try. The events of the past few months
have proven that our banks form the
back bone of the entire commercial and
industrial framework of the country.
The load that the panic has thrust up
on them is shown by the decrease of
the money in the associated banks of
New York city from S134, 100000 on
May 81, 1898, to s76, 900, 600 on August
10, or nearly one-half. The fears of
depositors is solely accounta BILE for this
condition, as when money is idle it
should accumulate in banks.
The proposed law would not be
''class legislation. 1t would not be
enacted for the good of the banks but
for the people as whole.
The change would do away with
those failures that are caused by
panic among depositors. Aside from
these, there remain the wrecks caused
by failures of creditors and those re-
sulting from incompetency and dis
honesty of officials. These latter
would neither be increased nor dimin-
ished by the law.
A few suggestions present them
selves:
All points should be considered in
reference to the matter.
A tax should be laid upon bank de-
posits sufficiently large to more than
Offset any calls the government is like
~ to sustain, large enough to pay all
expenses connected with the banking
system and to be source of revenue
to the treasury, so that there would
never come an opportunity to assail
the act as charge upon the govern
ment.
A provision should be added, allow
ing the establishment of banks with
less capital than $50, 900 in the smaller
villages. The Michigan banking law
provides that banks having capital
of not more than $4,000 may be organ
lied in towns with a population not ex-
ceeding 1900, and with capital of not
less than $25,OO in towns of not ex-
ceeding 5000 inhabitants. In practice,
no objectian is found to this limit.
There are many points where a capital
of $50, 900 could not well be obtained;
to forbid such towns the benefit of the
measure would be, in one sense, class
legislation.
Inasmuch as national banks would
replace savings banks, provisions
should be made for a savings depart
ment for such banks as desired to make
use of the same.
Let us consider this question not as
national bankers nor as private bank
ers, not as silver men nor as gold men,
but in the interest of the greatest good
to the people of the national. Fl.
Phinney, in American Banker.