Twice-a-week plain dealer. (Cresco, Howard County, Iowa) 1895-1913, 1908-09-29
SOME GOOD EVIDENCE
Former Secretary Gage and Con.
gresham Fowler on the De.
posit Guarantee.
THE WALSH FAILURE CITED
Clearing House Action Like Plan Pro.
posed by Democrats.
THE WALSH FAILURE CITED
Guards Against Honest Bankers Suf.
fering Runs Modern system of
book Should
Be Worth Face Always
tBy John E. Lathrop.l


hc1ently conservative" to obviate
fears that he would be unsafe" in his
banking views. Before the house COM
mittee on banking and currency in
Washington Mr.. Gage discussed ma
tonal finances and particularly the ma
tonal bank. He sought an illustration
or tile idea he was expressing. which
In general was in support of the guar
antee plan. and like many others
found 1t in the Walsh failure in Chi
cago.
After explaining how the clearing
house banks took over the assets of
the failed institution, guaranteed all
depositors, and prevented runs on 9th
er banks, Mr.. Gage said:
Mr.. Cages Statement.
! swell, they learned another lesson
and they adopted another principle
principle provided for in this (the
Fowler) bill. BY the vote and vol
untary compliance Of all the members
OF the Clearing House association,
they authorized the clearing house at
any time and at stated periods to act
upon its own volition and on its own
account, and for the information Of
the clearing house committee itself to
nave full, complete and comprehensive
investigation Of each member of the
association, and not only of each men,
per, but of every institution that car
rles the name Of bank over it that Is
cleared or represented in the clearing
house by any clearing house bank; and
l can tell you as safe prophecy that
we are at the end of disastrous fail
ure In the city Of Chicago by clearing
house banks, since this regime has
come In. l am told that Kansas City
has the same thing. and other cities
will eventually adopt It,"
Representative Fowler, Republican.
Charles N. Fowler, Republican, Of
New Jersey, chairman of the house
committee on banking and currency,
appears in the Congressional Record
with house speech in support of his
bill which provided for guaran ee of
bank deposits. He specially answered
the assertion that such guarantee
would induce reckless banking, say
ing:
! Mr.. Chairman, we are occasionally
met with the statement that guarantee
OF deposits would lead to unsound
banking. Can you think OF a
4 banker, because he had insured his de-
posits, going into the directors room
and saying: Gentlemen, we have liz.
sured our deposits today. Now let us
proceed to make some rotten loans?'
| us it not possible that it will occur
to those directors that their losses
must come out of their profits, out of
their reserves, out Of their capital, and
out Of their regulations? Will the,
not realize that they can get nothing
out of the guarantee until the last dol
lar Of their capital, surplus and
profits has been wiped out, and stock
holders have been assessed double the
amount of their stock?
The Bankers Reputation.
Until their reputa lions have been
injured. If not ruined, and possibly
some Of them have been started on the
road to state prison? Can anybody
think that any board of directors Of
any bank would be less solicitious
anxious and honest and wise after
they had guaranteed deposits than
they were before?
II assert again. after the most ma
ture deliberation, that # there is one
reason for insuring life and home.
there are more than thousand good
reasons-more than ten thousand good
reasons-why the depositors Of the
banking institutions Of the United
States should be insured"
Two Valuable Contributions.
These two men have offered valua.
bic contributions to the discussion Of
the proposed guarantee Of bank de
posts Mr.. Gage has set forth the
present trend Of bankers towards a
; closer watchfulness over all insttu-
lions which accept the peoples money
: In trust, and has indicated the exact
means whereby, under guarantee
law, bankers would do as now they do
!. maintain an association empowered
to look sharply into financial concerns
which seem to be departing from
sound methods.
His reference to the John K. Walsh
failure in Chicago was doubtless be-
cause 1t was known to the country
!. generally, having been given wide pub
licity and therefore most likely to at
tract attention as an illustration.
However, there is scarcely local.
ty wherein bankers in late years have
not gone under topping banks and up
held them by guaranteeing deposits
wholly or in part, in order to help in
the quelling of popular distrust and
, banking institutions.
No Delay for Depositors.
:, 1t is quite apparent that under
. guarantee OF deposits there would bt
no alteration of conditions affectins
banks now, so far as concerns espiOn'
age maintained by one over another
The important difference. however
would be that dcpositols would not be
subject to the ANNOYING of.en disas-
trous, delays in getting their money
which now they experience when
banks fail.
II But. that fewer faillres world oc.
cur surely would lie o"e vi the re-
Suits of such a law. Eyprvone knows
that many runs are prprpitated on