The Washington times., 1902-01-14
PLAN TO MAKE
BANKS SOLID.
A General Association to
Guarantee All Creditors
Against Loss.
COST WOULD BE SMALL.
Would Have Su ervis;on and Control
Over All Members.
FAILURES COULD BE MINlMIzED,
Ideal Safety banking rs Samuel u.
Archer Outlines it-Schcme for
National BanlScrs' Fidelity Asso-
ciation' Submitted to ComptrOI-
ler's OfiSe-0ne Criticism offered.

Samuel B. Archer secretary and treas
urer of the Tarif Commission League,
has submitted 10 the office Of the Comp
troller of the Currency, informally plans
for a National Bankers Fidelity Asso-
citation" which he believes would make
the national banks of the country al
most as safe as the Government itself
Ihe plan contemplates a great central as
ISOLATION and trust company to which al,
rational banks are to belong, and to
which all are to contribute a certain per-
centage of their deposits as an insurance
TO creditors against the insolvency of
any of their number. Other features of
the plan he believes would tend greatly
to reduce the percentage of failures
throughout the country.
Incorporated Under Federal Laws.
1t is proposed by Mr.. Archer that the
Fidelity Association shall be incorporated
under Federal laws. Its membership
Shall be composed of delegates from all
the national banks in the country, one for
each bank. A board of twenty-five trus-
tees shall be chosen who shall have charge
of the affairs of the association Each
bank shall have one vote for every s25,-
COO Of capital stock, surplus and undivided
profits in choosing trustees and in other
matters requiring general vote
This association is to hold on deposit
per cent OF the total deposits of all
national banks. and is to guarantee all
depositors and other creditors against
loss.
Supervision Over All Members.
1t is proposed thai the association shall
have supervision over all its members
and that it shall annually investigate the
sssets of each bank, as a supplementary
precsution in addition to the Government
examination. Mr.. Archer also proposes
that the association shall have the right
to change the banking methods and pol
Icy OF any of its members where such
change shall be thought to be wise. He
also proposes that 1t shall establish a
uniform system OF bookkeeping.
One of the features of the plan is that
two weeks vacation every year, and
that an expert accountant shall take
his place during this time and make a
thorough investigation of his books.
In the case of bank failure the asso-
citation shall Immediately take charge of
the bank, uhder the supervision and in
cooperation with the Comptroller of the
Currency, and shall at once pay all credi-
tors in full, setting aside a sufficient sum
10 al
notes.
Larger Bank Circulation Allowed |
Mr. Archer's plan further contemplates |
modification of the present law regarding |
national bank circulation, his theory being
that under the system of supervision
established by the Fidelity Association
1t would be safe to allow the banks a
much larger circulation that at present
and which need not be secured by Gov
ernment bonds. He advocates a circula-
tion plan somewhat similar to that de-
scribed by Secretary Gage in his annual
report and in his address to the National
Bankers Association. He proposes that
with the approval Of the trustees of the
association and Of the Comptroller of the
Currency, each bank shall be allowed to
issue its notes to an amount not to ex-
ceed so per cent of its capital This
circulation may be in addition to its
present circulation secured by Govern
ment bonds.
Cost Would BE Small
Mr.. Archer notes in his plan that from
the establishment of the present national
nlr Iau iod NJ irt.- |
years, only 1876 banks failed, and that the
total losses to creditors of all these
banks was less than SIS, ,0OO, 600. He
states that the percentage of loss to total
3ank deposits each year is only an aver
.ge Of one-twenty- of one per cent.
he explains that while he proposes that
he banks shall deposit with the Fidelity !
association per cent OF their deposits
his is an extreme of precautiOn that
nay not be considered necessary. He
uggests also that the immense sum OF
his fund may be largely invested by the
association in approved Government,
tate and municipal bonds, for the bene-
It Of the banks contributing it, SO that
be money would not be allowed to re-
main idle.
Large Banks Might Refuse to Join.
One criticism made against the plan of
ir. Archer by the office Of the Comptroller a
5 that the larger national banks general a
Y would not care to Join the association.
4 a general way the plan would mean, 2
hey say, that the large banks would I
uarantee the smaller and this, they In | [
innate, the large concerns would probably Il
OF care to do. Mr.. Archer points cut
hat while the greater number of fail \
res are among the weaker concerns D
here have been number of notable s
rashes among the apparently sound and j
rosperous institutions with Immense de- =
osits.
Mr.. Archer stated yesterday that he
ill present his plan TO number OF i'm
1rtant banking officers in New York and
ther cities Immediately.
Stop That Head Cold in 10 Minutes .,