Evening star. [volume] (Washington, D.C.) 1854-1972, 1904-04-26

Effect. Of asPanic This Year
"A panic this year would probably mean
the defeat of the republican party, whoever
might be the democratic nominee for the
presidency. Few de nocrats would desire
such an advantage at such price, All
citizens, without distinction of party, would
pray for, deliverance from panic and for
preventive measures, If they anticipated
one
The Secretary of the Treasury is not
the only person who might so conduct his
affairs as to produce a panic, unless the
law Is changed. The lesson of the run on
the trust companies of St.. Louis should
not be forgotten. This run arose from an
uncomfortable feeling of panic, which
started with an unreasoning few and was
communicated by suggestion to the masses.
1t might occur anywhere, and almost as
suddenly as a western tornado. The rem
edy is very simple, and, as it will benefit
piled at once, so that runs on national
banks at least shall be impossible forever
more"
"Since the organization of the national
banking system Congress has always pro-
vided for the absolute security of national
bank notes, by. which no holder could pos
sibly lose anything on them. These pub
lie deposits in United States depositaries
are also fluffy secured by collateral, which
the Secretary Of the Treasury exacts from
the depositary banks and holds for the
protection of the government The other
deposits in national banks, those deposits
which people sometimes get into a panic
over for fear of losing, are not secured.
But suppose these deposits ware as fully
secured as national bank notes and public
deposits Would there be any run on n
national bank then? What person would
then withdraw deposits except for use?
There are SO many national banks In
this country their deposits are SO large,
and losses to depositors through failures
nf hon 1yc haa
known small annual assessment on all
the national banks would cover any def
cheney of assets or of assessments on
stockholders to pay in full all depositors
case of failure, depositors would simply
be notified that their deposits had been
transferred to another bank; The depos-
it's would continue to be available without
interruption for a single day.
The Real Mischief.
mo mere run of light-headed depositors
ever produced widespread panic. The real
mischief begins when banks distrust one
another and country banks draw inordi-
nately on their reserve. agents at New
York and the other principal cities. If a
country bank knew its deposits with the
reserve agent were fully secured there
would be no occasion for drawing except
for use in the regular order of business,
which would be harmless.
with their deposits fully secured, ma
tional banks would inspire such universal
confidence that large amounts of money
still boarded from distrust Of banks would
be placed in them and give them a profit
which would much more than offset the
trifling annual assessment necessary to in
sure their deposits
1.-The example of national banks would
naturally be followed by state banks and
trust companies throughout the Union.
and all deposits would soon be fully Sc
cured.
TT would be difficult to conceive of a
financial measure that would be so CRATE
fully welcomed and highly appreciated by
post in national banks as an act Of Con-
gress providing for the perfect security Of
their deposits. And there should be no adj
ular and important law is placed upon our
statute books