Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1895-01-09

tered far and wide, n few here and a
Few there, and are not 30 circums,anccd
az that they could easily embarrass a
bank, even II damaging reports were rife
In the community as to the solvency or
the bank.
But the depositors found a friend last
week In Mr.. Johnson. Of Indiana, another
expert In financial matters, who addressed
the House Of Representatives on The sub
jeet OF the Carlisle bill. lie objected to
the bill that 1t robbed Peter TO pay Paul.
1T despolls." said he. the security OF
the dcpositors In national banks in the
interest OF the note-holder." Under the
present system. added he, whenever a
bank fails. all OF It's circulating notes are
paid. AMI yet only 90 per cent. Of the par
value OF the bonds which secure these
notes Is exhausted. The deposltors have
the difference between that 20 per cent.
and the premium value Of the bonds for
their payment" They have also the
tangible assets OF the bank: they have its
commercial paper: they have the double
security OF the stockholders" 80 that
whist the existing system guards the
no'e-holder securely. IL at the same time
protects the dcposi;or.' SO that the losses
OF the note-ho,ders have been next TO
nothing. We now quote Mr.. Johnson:
But how about the system proposed In
this Dill. 1t takes away the bond-sccurity
10 the note-holdcr. II requires n specific
guaranty only OF 80 per cent. CT the
amount or circulation upon the part OF
INC bank. and, IL you please. the safety
iuhd IN ten years would amount TO ;
per cent. more for security.
suppose a hank 10 fail. These specific
assets and securities are applied to the
payment OF its notes. bat a large margin
is left unpaid which is 10 be satisfied out
OF the safety-fund made up by the other
banks, and they In turn nave "a first lien
on the assets OF the failed bank 10 re-
imburse them their outlay. So the fund
that ought 10 be saved for the benefit of
the depositor is wiped out OF existence,
and he is left TO bear the loss. The &C
curity OF deposits IS necessary to FOcd
banking. 20 the millions Of dcpOS!tOrs.
and TO the people at large. 1t has been
the policy OF the government under the
existing law 10 protect these interests.
This policy ought to be pursued in the
future. Let US have a good security for
the depOsitoTS, as wei "a u good security
for the notc-hoiders. Any other system
Will fail TO answer the needs OF the great
American people"
1t does seem 10 us that Mir. Johnson's
argument is worthy Of serious consi1era-
ton. The depositors ought 10 AVE a fund
saved for them. 1t Is Creditabie to the
intelligence Of the depos'tors in the ma
tlonal banks that they have made no ruin
Gus runs upon the banks. There is many
n sound bank which. nevertheless, has on
ddeosit three or four times as much as
the capital stock q that bank. We can
all Join in Mir. Johnson's declaration that
a fund ought to be saved for the benefit
Of the depositors.
1t has been contended that If the Do
positors were as well secured as the
note-holders. there would never be an
other panic. There could bc no occasion
for alarm on the part Of the former.
And so each bank might use viii perfect
safety the full amount Of its deposits. OF,
at any rate. a large amount Of them.