The weekly true Democrat. (Tallahassee, Fla.) 1905-1912, 1907-11-15

The New YORK. Journal of Commerce
has given out the following good and
sensible advice 'It is extremely rare
that the general deposits, even in an
embarrassed bank, are not entirely safe
IL time is given for realizing upon re-
sources without sacrifice. In these re-
cent days of excitement the deposits in
banks and trust companies, except those
shown already to be in an unsound con-
diUion, of which there has been only one
or two, have been entirely safe but no
bank can pay a large proportion of its
depositors all at once. II keeps in re-
reserve only enough cash to meet cur
rent demands, with sufficient margin
for absolute safety in ordinary times,
and depends upon the maturing obiga-
tions OF customers to keep this up while
the bulk of it's funds are out in loans
and investments earning profit. If they
were not so employed there would be no
prifit in banking and no banks for the
accommodation of depositors.
Savings banks depositors are apt to
be blind to the fact that their money
cannot be kent on hand ready to be paid
out at any moment, except enough of il
TO meet current demands, which will
ordinarily be provided for from current
receipts 1t must be invested in inter
est bearing securities, or in real estate
loans, so as to bring IN the revenue
from which interest is paid to deposit
ors. If they make a sudden dash in
great numbers for their money the bank
Twill not have enough on hand, and the
balance it keeps on deposit in other
banks for emergencies will not be sufii-
cient to meet a prolonged run" 1t
must have time to realize upon securi-
rites by selling them and upon loans by
their maturity, and in this there may
be needless loss for the depostors as a
whole. If che bank has TO suspend or
require It's depositors to give il time by
giving notice of Withdrawals, il is not
sign Of weakness, but is due TO the
blind selhshness and ignorance of those
who are clamOring for their deposits
without reason. An understanding Of
how the bank works would prevent q
run in most cases.
1t is much the same with the ordinary
depositors in commercial banks, many
of whom nowadays are small traders
and women householders. They do not
realize chat their money is not always
in the bank waiting for them whenever
they are ready to call for it. Most of
it must be out working for the bank, in.
vested in commercial paper or. loans on
security, which take time 20 mature. 1t
is gong out and coming n,with agreater
or less increment all the time, and only
portion is kept on hand in cash, rarely
more than quarter of the amount on
deposit at any one time. All the depos-
its are subject to demand, but it is not
ordinarily expected that the demand
made for paying out from day to day
will not exceed the amount that is COM
ing in in payments to the bank. The
reserve is lying idle to meet exceptional
demands, but the law requires it TO be
made. If these suddenly come in with
rush and persist day after day the
money of the most hOurishing bank will
not be at immediate command to meet
them. 1t may nave plenty of resources,
but not able to turn them into cash and
pay them over to depositors at once.
By an overwhelming and persistent de-
mand it might be forced to suspend
with millions of surplus not instantly
available.