Americus times-recorder. [volume] (Americus, Ga.) 1891-current, 1907-10-26
Light ON RECENT
BANKING TROUBLES
Chain System Which Spec
uIatOrS Employed.

To the average reader the doings
Of the New York clearing house and
banks during the present week have
been more or less Of a puzzle In a
recent editorial the Philadelphia
Press explains the methods of the
clearing house and of the methods by
which spectators secured control of
banks with the expenditure of very
little cash.
Says the Press;
The New York Clearing House is
the most important financial author
ity in the country. Without legisla-
ton, by sheer force of circumstance
it has come to exercise on financial
emergencies an authority such as
Peels banking act gives the govern
gors of the Bank of England, with
the British Ministry behind it,
French law confers on the Bank of
France, with the Finance Minister of
the government, and German statutes
on the Bank of Germany and the i'm
perial treasury at Berlin, acting joint
jy
These great powers have never
been more wisely or more efficiently
used by the New York Clearing House
chan in the past three days. It's swift
action has summarily reduced, and in
Ghe end will probably altogether re-
move, a peril to all the banking cred
SIS of the country, of which thinking
and observant men were well aware
for six years past but which, for OBJ
vious reasons, it was neither wise nor
expedient to discuss in public.
Since 1901, or thereabouts, groups
of spectators, handling the enormous
sums trusts command and modern
fortunes permit, have been buying
New York banks on the Chain" sys-
TEN used by Hartman in buying rail
roads. Banks shares, once bought
TO secure control, often at price
which left only l and per cent re-
turn, were hypothetical to buy the
shares of another bank, and so on I'M
til the group of spectators just
forced out, Heinze, the Thomases
and Charles w. Morse had from six
10 eight banks and four trust compa-
mics to go and come with in that
branch of grand finance which only
the advice of skilled lawyers pre-
vents from being something worse.
Such purchase and ownership of
bank shares is rare. In Boston the
savings banks own the national
banks, an arrangement most safe for
che community, however it is with
she savings. The national banks here
are owned by men and estates posses
sing the implicit confidence of the
community. 1t is now many years
since dubious ownership appeared in
z1ny Philadelphia banks The Chica-
go banks are we'll and strongly own
ed In other large cities, and espec-
tally in smaller cities and towns, own
ership of bank stock is a sort of pat
,ent of responsibility.
But in New York the chain" of
banks from which these promoters
and spectators have just been routed
sout was recognized as the danger
point. These banks were controlled,
not for banking profits, but for spec
ulation. Their reserves were known
TO have been converted from safe to
unsafe securities. Their ownership
was used in all the ways banks can
be employed to provide loans for per
ilous operations.
AS small rural national banks hold
their reserves under our system in
reserve cities, and banks in reserve
cities deposit in New York, nation
al bank failure, and much more nat
ional bank failures for a group of in
situations, imperil credits over wide
area When the speculative group
got to the end of it's rope and resourc-
es the New York Clearing House
wisely and ruthlessly cleared out all
concerned in the abuse of banking.
This is what the resignation of
Morse, the Thomases and Heinze
meant and it adds to the stability of
all national banks in all cities.
E'lcri9o cy;,yos bor mott, +1,i+,, dove,