The Manitowoc pilot. [volume] (Manitowoc, Wis.) 1859-1932, 1907-11-14
NO MORE PANICS.
BY JOHN SCHUETTE.

last financial furry has shown that an
increase of currency by this method
would have prevented it.
But would it? What caused it? Was
it the lack of currency? No!
Before it broke out the bank reserves
were normal, the per capita circulation
was and is now 80 per cent more than it
was in the panic year of 1898. Was it
owing to decline in our general pros.
perity? No This ls greater now than
it ever has been. Then, what caused it?
Oniy and solely fear-tedr Of bank failures;
fear that money in banks might not be
safe fear took it out of banks and circu-
lation.
1t was not because there was too little
money in banks, but because the deposi-
tors feared that it was too much money
to intrust the banks with, and these
took it out and boarded it.
The money is all there, but is idle
waiting for the storm to blow over later
it will again come ont from shelter
This is best illustrated by comptroller
Eckels's report to congress in the panic
year of 1898, in which he says, on page
3, that that year, from May to Septem-
Der, S31S, 600 900 was drawn out of ma
tional banks alone. This was 90 per
cent of their deposits, and in all banks
Of the country it must have been over
81, O0O, 00O 900. He further says on page
"a
THE financial situation of the past
few months was not the result either of
the lack in the volume of the currency,
of which there is now plethora, or of
want of elasticity in the present sys-
tenn OF issuing it, but arose from loss
OF confidence on the part of the people in
the solvency ofthe distinctively monetary
institutions of the country. 1t is worthy
of note and of serious consideration that
at the very time the scarcity of currency
for business purposes was at its height,
the volume of currency was increasing
the most rapidly The amount per cap
ita was much larger than in recent
years.
Under the same peculiar condition of
affairs, which marked the monetary cit
uation from May to September, no sys-
TEN, no matter how elastic, or volume
of currency however large, could afford
relief AS long rs confidence is destroy
ed and credit wanting, money boarding
will go on, and additional issues but add
to the boarding, and give but little if
any actual relief.
On the other hand when confidence
and credit abound, there exists little
need for an abundant circulation me-
dium, because under such a condition
of affairs the amount of actual money
required to transact daily business af
fairs Is reduced to minimum"
This, then, shows that the more mon.
ey in banks in a panic, the more severe
the shock, and the only remedy is to go
at the root of the evil, and this is to
have the deposits in such a condition
that no one need rely on the safety of
his bank for the safety of his deposits
INSURANCE or DEPOSITS.
This the insurance of bank deposits
will do.
If all deposits are insured under gov.
ernment control, the depositor cares no
more of the solvepcy of the bank in
which he has his money than he now
cares about the bank against which he
holds bank notes. He knows, even if
his bank fails his deposits are secure.
ASSet-eloStic, flexible, central bank on
dny other kind Of eTpanSjre c,urcncy, as
Comptroller Eckels says, will not pre-
vent fear, and give no relief, however
large, but only add to the boarding.
Why then, by asset currency intensity
distrust?
The insuring of deposits under gov.
ernment control would bring at least
five times more money out of hoardings
and into banks and circulation than by
all the different plans proposed, and
that is the main thing, without being
withdrawn through fear of its safety
because it would be the safest place to
keep it.
If deposits were insured the banks
would not need he immense cash rySerres
remaining idle IN their rd,tltS, preparatory
for a run, of which the national banks
alone carry about $1,000 600, 600 One
half of this would be ample, which
would be $500 600, 600, or about three
times more than asset currency would
produce. Why, then not rather compel
national banks to insure their depositofsY
| If we had had such insurance in the
panic of 1893 we would have had no
panic then, would have had none now,
nor would we ever have one again
How much nervous strain, anxiety
and worry could have been spared by
whole population, when all this wreck
age could and can be saved by paltry
sum of about 81 600, 600 annually.
Why, the San Francisco calamity loss
was over 300 times more in a few hours.
Some may think that deposit insur-
ance is too vast problem to undertake,
but is it,
One simple insurance company, with
a capital of only $3.50, 600, and with
| $40, 900 600 premium receipts, pays every
year, s. 900, 900 losses, which is four
times more than the average yearly loss.
es have been TO depositors in national
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