The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1897-04-22
nEEonm N RANKING.

Reform N BANKING.
A demand for reform in the American
banking system IS not confined to deposit
tors and would-be borrowers. Whether
the AWAKENED interest on the part Of
bankers Is due 10 recognition Of the wis
dom OF deferrsng 20 the popular cry. or
whether Il Il realization OF the real
needs In themselves. matters very little.
Il exists ard will be productive of much
good. and In the end the American bank
Ing system should become "a nearly per-
feet In IT. adaptation to our condition as
the Scottish banking system TO Great Brit
ain and those colonies where IL
governs The bankers magazines
and papers are discussing the aues-
ton. and even those which refuse
10 believe that the banks are 20 blame for
crises and panics are compelled to admit
that there Is a widespread dissatisfaction.
Philadelphia. slow 90 initiate new move
ments. but characterized by respect for
permanent and stable institutions. has
begun the Investigation. and recently a
large number OF her bankers invit ed Prof.
Robert Ellis Thompson TO address them
on the Scottish system OF banking. That
system Is not so well adapted to this
country az 10 the country where IL origs-
mated. one reason r. the difference be-
tween state laws and another Is the
greater area. Nevertheless the general
principles could be made applicable to
\
OF any banking system are that the de-
positoT shall be- safe. that the rate of In
terost for loans shall be- moderate. and
that the banks should not be so sensitive
a. they now are to fluctuations in general
business. That these conditions are oh
served in Scotland Is certain. There have
been only six failures since less. which
proves that the depesitors are safe and
that the banks are not seriously affected
hy panics The rate OF interest Is very
low scarcely ever above 5 per cent. The
system was adopted in 1876. and Sir Wal
ter Scott IN 1884 said the wealth OF the
rich and the comforts OF the poor had
both been increased. II may be said that
although the system did not make the pee-
pie Industrious Il preserved 10 them the
fruits OF their Industry.
Briefly. the system consists OF the man
ner OF making loans aud the good jude-
meat exercised IN lending money Tbs
FIST can be governed oy law; the other
cannot. The popularity OF the system In
the bank note. When a. customer obtains
loan Of The bank he Is not given credit
on the books. according 20 Mr.. Thompson.
hut 10 given the notes OF the bank. The
bank note Is the basis OF the Scottish sys-
tom. The bank officials investigate the
general character 81 the intending bor-
tower for sohrlety. industry and general
character. Il four men desire to borrow
si.aa caea. foIr bonds are drawn up and
each signs enc bond snd tndorses the other
three. and tscy become mutually respon-
sible 10 TIE oas.k. This IL a permanent
loan and continues until the bank sees
some reason fer calling Il IN. II IS not for
a cssts'n llEse The nan IS charged IN
terest only upon what he takes cut. lie
pays for Just SO much OF the loan as he
Uses. lie estaSAs hes bank account. ana
pays per cent. 20 the bank Whenever his
account Is against aim. and gets 2 per
cent. whenever his deposits exceed what
he has drawn out Every Scotch bank Nc-
count Is made on this s>gsnciplo. The Dor
rovN- 10 not now IN s~verisa haste 10 Use
tAe ioan. Dr. Ths@psoa SAYS the system,
has changed TIE Scottish character. In
al. seventeenth century the scotch wore
rash and hsssv. They arc row cautious.
Matval responsibility @As had much 70 80
with The change.
The loans % the Scottish banks have =
degree az safety that does rot exist else
who're. The result Is thst the banks car
extend their credit. because they can %
Ter groups What they cannot DO Tor insl-
Niea&ls, The system includes the far
n'sr and the sheep owner. the poorest a.
well as TIE richest. TIE ambition 81 ths
sesvant Is &c have = bank account I'D
when be or she has laid up thirty shslliuSs
In TIE saving tuEsa. Il Is deposited n rs
ioeal bank. Snd the eepositor becomes =
customer 90 Tire bark. ~ creates az I'm,
u,euse popularity for ths banking sys-
tan. which eoala not exist with any other
s1sten.
The most important feature IS that this
system Is net only ths safest Ter ths
hank. but is also saseS< Tor the business
- THE community Ey tes system ,hers
are no temporary Ieaas, TIE great suls
q. the credit money was rot created -
eHEaSeeasass esswc~a the back snd -
customers IA the Amerseza system "a.
hNnk &spoasssrs h~ecrns scsT~d as Trey
we're tsss summer. Trey est acwa RS
hank credits al TIE rate 80 ytee 80 Il
50 asa.qsa a wees. Tae failures In snslsi-
tl1es q, eases resulted frens TIE aesser
&C tie eanks. - the scottish sys.eH
tie eaaks naast stand - the agzsaos.