New-York tribune., 1907-05-19

is not going to result in any transfer of del. its
from bank to another; and even the .---est
banks NAV derive much benefit from the fact -at
their deposits are known TO be guaranteed q III
the allied banks. When the mere fact that raE ent
is refused on check that is not properly IN rsed
starts run of several days duration a per lily
solvent bank, as was the at Pullman,
recently, no banker can say when or how he ing
to be hit. Even the largest banks have bee sub
jeCted occasionally TO utterly SenSelesS rir to
their great inconvenience, and sometimes cor ley
able loss; so must have some personal q. -rest
in putting check public emotionalisrn.
There IS another obstacle, however, that has m il
something of a menace The organization of 81 an
association any really comprehensive plan uld
practically put out of business every bank III did
not belong to it. Both strength and danger uld
lie i'll that fact. The association of few banks tOr
mutual guaranty might not seriously attCc- the
Others, but any general and comprehensive orgn.za-
tlon would aSSuredly leave the outsiders sJrauied
The universal guaranty of all deposits wiJhG the
association, making loss to depoSitors delay
IN paying them, an absolute impOssibilty, would be
an attraction that would destroy outside cOmpct-on
An Element of Strength
IN this there would be an element of strength for
L 1t would give the ASSOCIATION power To enforce
its ediCtS. Expulsion would have the effect OF put
ting the expelled bank out of business for would
immediately lose the confidence OF its patrons, and
expulsion would face the reCalCitrant banker who
refused to conform to the rules of sound finance
The association might not have the direct authority
to close an unsafe bank; but it would have the
power to do so indirectly, for the offending INSTITUTE
tiOn would face the alternative of expulsion or oI
having its affairs wound up and its depCsitoTs paid
by the associated banks.
This power financial life and death, and even
birth, would be a mighty authority to be vested m
even mutual and voluntary association, and unless
restrained by wise regulations, might DRIFT INTO
practical banking monopoly. As new bank could
hope to succeed without its sanction, 1t might
easily bar out any ventures in the banking line
and absorb the business of such of the older banks
passed out of existence. OF course such a short
sighted policy would ultimately wreck the aSSO-
clalon itself; but there possibilities OF injustice
to be guarded against iii formulating the details
The association should be broad and open In
the very nature of things, fulfil the purpose OF
the organization, the requirements for admission
should be rigid; but any bank, new or old that IS
able to fairly meet those requirements should oe
admitted Otherwise, the association would iail OF
Its real purpose, which be general protection.
and IN no sense the limitation, of banks or banking
Such an organization, If broad enough in its scope
and comprehensive enough IN its membership, could
practically put end to the dangerous and some
times criminal banking methods that revealed
when an nsolvent banks affairs get into the courts:
Such complete and far reaching organization OF
banks IS not to be expected in the immediate utue'
put the tact that some smaller combinations already
nave been definitely proposed and the further tact
that many minds busy with the problem, seems
TO give promise that form of mutual guaranty,
that eventually may be elaborated to cover the
points here suggested, is not improbability.