The Detroit times. [volume] (Detroit, Mich.) 1903-1920, 1908-10-21
make loans and discounts than to cash

make loans and discounts than to cash
depositors' checks.
Relief came to them gradually In
the shape OF heavy United States
treasury deposits and the importation
OF gold from Europe. bought with our
money, by the immense quantities of
grain and cotton that we shipped to
Europe to meet the emergency.
Starts a. Just 4 Bank Panic.
1t was bank panic, pure and sim
pie, when 1t started, but SO closely re-
lated Is banking with every other bust.
ness that It became national trade
and industrial. panic"
Referring to the hope that the ma
tional monetary commission may
evolve satisfactory and elastic cur
rency plan, Mr.. Clews commented
favorably upon the Canadian system
with its great elasticity, contracting
II with the defects Of our own system.
"Our national bank notes. though
perfectly secure, rest on a false econ
omic foundation" he said. They are
evidences of debt secured by other
evidences of debt, namely, United
States bonds. They should be secured
by q reserve of specie and other bank
assets. No country except our own
has a currency secured by bonds"
The argument was then advanced
that the new emergency currency act
will prevent any further panic through
boarding of currency, the $500, 1000, 900
authorized being sufficient To replace
any boarded. The 6,S24 national banks
now have but $692,0Ss,991 OF currency
outstanding.
Touching the Industrial situation,
Mr.. Clews stated that the depression
in the iron trade IL greater than after
the panic of 1898, bank exchanges
having fallen In greater proportion
in Pittsburg.
"As an additional protection for
both the banks and their depositors
against bank runs, many favor the re-
moval Of the distrust that leads to
them in time of trouble, by the guar
antee of bank deposits, the insurance
to be by the banks themselves col
lectively guaranteeing their payment
he said.
1.-The guarantee could be easily aud
safely furnished by the national and
state banks and trust companies In
each OF the bank clearing houses OF
the country, combining and paying an
annual charge on circulation to estab-,
lish a fund for the payment OF any
part OF the deposits OF any insolvent
bank or trust company in their men,
bership, unable to pay them In full.
A small charge. they contend. would
suffice for fund more than sufficient.
ly ample for the purpose. the losses
TO depositors by failed banks having
been very small about one-fifth Of
one per cent"
Mr.. Clews described the Suffolk
bank system which prevailed In New
England before the civil war, a credit
currency system.
Banks Oppose Guarantee.
Most OF the banks are strongly op-
posed to the proposed guarantee" he
said If there Is ever to be a guar
antee system established, 1t should
not be by the government but by the
banks at their own desire and on their
own initiative, free from all compul-
sion
The clearing house banks In each
city should. through their clearing
houses, manage this deposit guarantee
~ o'Nh III ehtmotAFtof NithOuA
ing the government to handle &C. Those
bankers In. favor OF II feel assured
that this insurance will be accom-
plished under mutual deposit guar
antee system within no very long time.
They also feel sure that II would
more effectually than anything else,
prevent bank failures and bank pan
les, rs II would, for their own protec-
ton from losses. cause all the banks
to closely supervise one another and
check unsound banking.
II hold that the proposition for tho
government to guarantee the deposits
Of the national banks should be strong
ly opposed on both political and flnan-
cisl grounds Such "a guarantee
would give the government a far more
dominating control over the banks
than IL now possesses. and. therefore.
tend to make the national banking
system too much OF political ma
-hir7e. Hike the ofti=tnited States bank
whose downfall was due to political
corruption.
II advocate the closer supervision