West Virginia argus. [volume] (Kingwood, W. Va.) 1877-1946, 1908-10-01
Former Secretary Gage and Con.
gressman Fowler on the De.
posit Guarantee.
THE WALSH FAILURE CITED
Clearing House Action Like Plan Pro.
posed by Democrats
Guards Against Honest Bankers Suf.
fering Runs Modern System of
Credits-Bank book Should
he Worth Face Always
tBy John Il. Lathrop.I

h' heasuiN, may De regarded as SUI
hcienty conservative" TO obviate
fears that he would be unsafe" in his
banking views. Before the house com
niittee on banking and currency in
Washington Mr.. Gage discussed ma
fional finances and particularly the ma.
tienal bank. He sought an illustration
OF tie idea he was expressing which
In general was I'm support of the guar.
nntee plan. and like many others
found it IN the Walsh fpilure I'm Chi
cago.
After explaining how the Gearing
house banks took over the assets OF
the failed Institution. guaranteed all
depositors, and prevented runs on 9TH
or banks, Mr. Gage said;
Mr.. Cages Statement.
well, they learned another lesson
and they adopted another principle. n
principle provided for In this Che
Fowler) bill. BY the vote and vol
untary compliance of all tho mombers
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
have fun, complete and comprehensive
investigation OF each member OF the
association, and not only OF each mem
Der. but OF every institution that car
Fes the name OF bank over it that is
cicared or represented I'm the clearing
house by nny clearing House bank; and
can tell you as safe prophecy that
we are at the end OF disastrous fail
ure In the city OF Chicago by clearing
bonse banks, since this regime has
come ~, am told that Kansas City
mas the same thing. and other cities
. Will eventually adopt it,
Representative Fowler, Republican.
Charles NJ Fowler, Republican. OF
New Jersey, chairman OF the house
committee Oh banking and currency.
appears In the Congressional Record
with a house speech In support of his
bill which provided for guarantee OF
bank deposits. He specially answered
the assertion that such a 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 n
banker, because he had insured his de
poslts. going into the directors room
and saying; 'Gentlemen. we have In
aured our deposits today. Now let ms
proceed to make some rotten loansT
rs II not possible that 1t 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? VIII thns
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.
"Untll their regulations have been
Injured, II 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 solcftious
anxious and honest and wise after
they had guaranteed deposits than
they were before7
81 assert again after the most ma
ture delibcratlon. that r there is one
reason for insuring life and home.
there arc more than a thousand good
,1easons-more than ten thousand good
reasons-why the deposltors OF the
banking institutions OF the United
States should be insured"
Two Valuable Contributions.
These two men have offered valua
pie contributions 60 the discusson Of
tho proposed guarantee OF bank de
poets. Mr.. Gage has set fOrtb the
present trend OF bankers towards n
closer watchfulness over all instltu-
tions which accept the peoples money
In trust, and has indicated the exact
means whereby, under a guarantee
law, bankers would do as now they do
--maintein an association empowered
20 look sharply into financial concerns
which seem 70 be departing from
sound methods
His reference to the John H. Walsh
failure IN Chicago was doubtless be
cause II was kDOy,h to the country
generally, having been given wide pub
llcity and therefore most likely to at
tract attention as an illustration.
However. there is scarcely n local..
~ wherein bankers in late years have
not gone under topping banks aud up,
held them by guaranteeing deposits
wholly or in part, in order to help in
the quelling OF popular dlstrust and
the undermining Of confidence I'm ali
banking institutions.
No Delay for Deposltors.
II ls quite apparent that under
guarantee Of deposits there would be
20 alteration Of conditions afrectlns
panks nov, 40 FAR as concerns espion
age maintained by one over another
The important difference, however
would be that depositors would not b,
subject TO the annoying, often disas
trous. delays In getting their money
which now they experience wher
banks fall
But. that fewer failures would oc
cur surely would be one OF the re
suits Of such a law. Everyone knowl
Ehaf many runs are precpitated o.
banks which are ehsolutely sound