Gilpin observer., 1908-10-22
THE WALSH FAILURE CITED
Clearing House Action Like Plan Pro-
posed by Democratic.
Guards Against Honest Bankers Suf.
fering Runs Modern System of
Credits-Bankb book Should
Be Worth Face Always
LBy John z. LathrOn.l

uCIeIlllN tOHEcTNatlNe 10 ODNldte
fears that he would be "unsafe'' in his
banking views. Before the house COM
mittce on banking and currency in
Washington Mr.. Gage discussed ma
tional finances and particularly the ma
honal bank. He sought an illustration
of tie idea he was expressing. which
In general was in support of the guar
antee plan. and like many others
found it 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.
'Well, they learned another lesson
and they adopted another principle a
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
have full. complete and comprehensive
Investigation of each member of the
association, and not only of each men,
ber. but of every institution that car
ries 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 n 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 guarantee 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
banker, because he had insured his de-
posits. going into the directors room
and saying: Gentlemen. we have in
sured our deposits today. Now ier Us
proceed to make some rotten loans?'
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 sCock-
holders have been assessed double the
amount of their stock?
The Bankers Reputation.
"Until their regulations 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?
Il assert again. after the most ma
ture delibcration, that f 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 vaua.
bic contributions to the discussion of
the proposed guarantee OF bank dc
posts. Mr.. Gage has set forth 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 n 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 II. Walsh
failure in Chicago was doubtless be
cause II was known TO the country
generally. having been given wide pub
LEFTY 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 toppling banks and up
held them by guaranteeing deposits
wholly or in part. in order to help In
the quelling of popular distrust and
the undermining OF confidence In all
banking institutions.
No Delay for. .Depositors.
1t is quite apparent that under