The Emmett index. [volume] (Emmett, Idaho) 1893-1925, 1907-12-05
WHAT'S THE REMEDY?


ing their deposits from banks an
hiding them away And what doe
the secretary propose TO do t
remedy the trouble? Why, he pro
poses to allow the national bank
Of the country to issue emergenc,
currency to an amount equal Il
one-half of their capital stock. Al
the capital stock is about all the
security the depositors have now
for their money it would look to
the ordinary citizen who doesn'i
pretend to know much about
banking, that the plan suggested
by the ex-secretary would take
away a good part Of the already
inadequate security of the deposit.
ors and to that extent decrease
their confidence in the banks Now
we are Of the opinion that Mr..
Shaw is alright in his FIRST state
ment, that the cause of the trouble
is that depositors have been with.
drawing their money from as
bank and hiding the same and by
doing so have decreased the amount
of currency in circulation. This
proves pretty clearly that there is
plenty of currency in the country
to do the business if the people do
not get scared and hide it away.
Why are they frightened Evil
IDENTIFY because they are now. and
have been for several months afraid
that their deposits in the banks are
not safe. What is the remedy
Evidently to hit upon some plan
that will restore their confidence in
the banks and make them feel that
their deposits are abs ,lltely secure.
And is there any reason why they
should not be made secure9 1t is
an unreasonable thing for the de-
positor to ask that his money be
made so safe that lie need not lose
a moments sleep
People know from sad experience
that banks do break and even if
the depositors are paid in full in
the end, which is not often, they
must wait a long time to get it and
take il In partial payments If the
failed bank doesn pay out. as is
generally the case, they must lose
and there is no recourse for them
so far as they have ever been able
TO find out. The remedy seems to
us to be as plain as the nose on
a mans face. Provide for a guaran-
tee of the deposits.
Statistics show that as compared
with the total amount of deposits
in the banks of the country the
losses have been very small Since
the national banks were first auth
orized the average loss to deposit
ors has not exceeded 100 of / per
cent per annum of the total amount
deposited in all the national banks
of the country. A tax of l-10th of
/ per cent per annum on the aver
age amount of cash OH deposit dur
ing the year on all of the national
banks of the country would pro-
vide guarantee fund ample to pro-
tect every depositor. The tax
should be collected by the general
government and held as a trust
guarantee fund to make good to
the depositors their losses in case
of bank failure.
Bankers object to this plan for
some of the following reasons:
They say it makes the strong. con-
bankers stand good for
the recklessness and inefficiency or
OF bankers who do not
do legitimate banking business.
They saw that under this guarantee
plan the more reckless style in
which a bank was run the more
business it would do and the great
er amount of deposits it would
gather in. For example, the reck-
less banker would offer a large rate
Of interest on deposits whether the
same were time deposits or subject
TO check and that the depositors
knowing that their deposits would
be safe in any event would put |
their money in the recklessly man {
aged bank rather than in the bank l
hat was managed with conservat-
SIN and honesty. They say fur /
her that such a law would encour-
.ge reckless banking, for each
banker would feel first that his de-
oosits were secured and second ;
hat he would have to offer unwar- a
'anted inducements in order to get Z
he business. a
We do not deny that these argu- :,
nents seem plausible, but it seems
o US that most of the objections if 9,
lot all of them could be overcome ;,
" a properly guarded law We /
would make the incorporators and :,
in a bank liable for u
lot less than double the amount o
f their stock and we would require n
ach stockholdsr to file a sworn d
tatement with the comptroller of Fl
be currency showing that over "
~ obo,,a al Iaoro1 a-,..,,, - $50 l.,