Evening star. [volume] (Washington, D.C.) 1854-1972, 1908-05-08
PLAN TO SAVE BANKS
J. c. HaIIoCk Has New Method
to Propose to Congress.
USEFUL IN TIMES OF PANIC
Suggests Legislation Affecting Cen
trail Reserve Cities.
SOLVES A FINANCIAL PROBLEM
Would Make It Compulsory Upon
National Banks to Accept Checks
From Other Institutions.
USEFUL IN TIMES OF PANIC
SOLVES A FINANCIAL PROBLEM

Runs on national banks and the finan-
cial difficulties attendant thereon can be
prevented, according to j. c. Hallock of
Brooklyn, N Y. If Congress will lend
helping hand. Mr. Hallock is here to pre-
sent his views to the lawmakers and to
describe in detail his plan to guard
against financial troubles in the great
cities Mr.. Hallock's father originated
the clearing house system in America.
Progress in Legislation.
The complaint throughout the Union
that national banks Of New York refused
last fall to furnish currency for needs OF
interior banks" said Mr.. Hallock to
Star reporter. has been heard by the re-
publican caucus and a bill recommended
that would enable national banks in CEN
trail reserve and reserve cities to obtain
ali the currency they required to supply
the needs of interior banks This would
be progress in financial legislation.
But will Congress turn ii deaf ear to
another crying evil OF the times: The
country has unnecessarily suffered from
the suspension OF banks that have sufh-
cient assets to pay depositors In full. For
years past all national banks In New
York. Chicago and 81. Louis have mad
such a suf1lciency Of assets and been so
Of these three central reserve cities would
not lose a dollar If Congress compelled
every national bank of New York to &C.
cept checks on all the other national
o,ns Of IA city ebeekz amd
every national bank Of st. Louis to &C
cept st. Louis checks. whether the ma
tional banks drawn on were open or
closed This would protect all their de-
positors and correspondents everywhere.
"A bold proposition! But no more or
less bold than the resolve of the republic
can party In 1881 to save the Union
There are only thirty seven national banks
in New York. fourteen in Chicago and
eight in St. Louis They are in position
to protect themselves against loss If made
responsible for all legitimate claims Of de-
positors and correspondents on them
selves. Experience during the past fall
and winter has shown the necessity and
justice Of making them responsible.
1.-The chief characteristic OF the late
panic was distrust of New York banks
Would there have been any panic to speak
camille National Bank. on the Kncker-
booker Trust Company, on the Trust
Company of America. on the Lincoln
Trust Company. on the Brooklyn banks?
Without those runs, would interior banks
have been frightened?
The Source Of Trouble.
"All the trouble came from those runs
Could they not have been prevented?
Surely they could For example during
the last week of January, New York con.
cocted runs on four members Of the
clearing house, which resulted in closing
the National Bank of North America,
Monday. the 9th: New Amsterdam Ma
tional Bank. Wednesday, the 18th: Me.
chanics and Traders Bank, Thursday, the
goth; Oriental Bank. Friday. the 31st
and the Home Bank of Brooklyn, Febru-
airy l. There is a way to prevent such
runs. The New York banks should have
done for their associates what the Ca
madam banks did for the Sovereign Bank
OF Canada, which went out o1 existence
without closing IFS doors. That trick Of
closing up failed bank without closing
Its doors is worth knowing.
The Sovereign Bank was a large insti.
tuition, with many branches and $14 600 900
OF deposits. On Saturday, January Is
lVUS Its president publicly announced that
an agreement had been made with q mum.
Der OF banks by which nearly all the
branches Of the bank would open that
morning as branches Of other banks: that
this arrangement would entail no loss of
any Kind to the banks depositors or Gus
toners: that they could withdraw their
deposits if they pleased. or they could al
low them to remain with the bank to
which they had been transferred; that
the sovereign Bank of Canada pass
books would be surrendered and mass
books of the new banks obtained: but
that borrowing customers would, of
course, have to make other banking ar
engagements as soon as possible.
THE passing of the Sovereign Bank was
accomplished without even a ripple of
excitement In the market. An American
visiting Toronto at the time said:
Why. If this were New York or
Chicago, there would be a line of people
half way up the street, crowding and
f1ghting for position. and not only that.
but there would be crowds in front of ali
the other banks. / don't know how you
do it,
Divided the Accounts.
The bank and all Of it's branches
opened as usual on that saturday morn
Ing, and few depositors withdrew
their savings. but the transaction Of
business went on very much as usual.
Every depositor who did not wish to
withdraw his savings was given another
book issued by the bank that had taken
over that particular bank. It is inter-
titioned among the thirteen banks that
guaranteed the deposits and took over
the branches. The head Office and Mar
xet street branch in Toronto were taken
over by the Canadian Bank of Com
| merce, while the business Of the two
omces was apportioned among seven
banks. The Toronto Offices were kept
open for Il month or SO. until the bust
ness CouIO De wound up, out then closed.
The savings accounts were divided as
follows: Nos. l to 1929. to the Mer-
chants Bank; 1900 to 1899. to the Do
minion Bank; 1900 to 1859 to the Bank
Of Nova Scotia. and $500 and on to the
Bank Of Toronto. For the accounts Of
customers outside of Toronto the fol-
lowing arrangements were made: The
Dominion Bank took over seven
branches. Standard Bank eight. Bank of
Hamilton six, Bank of British North
America two. Merchants Bank two, I'm