The Democrat-sentinel. [volume] (Logan, Ohio) 1906-1935, 1908-10-01
THE WALSH FAILURE CITED
Clearing House Action Like Plan Pro.
posed by Democrats.
Guards Against Honest Bank Suf.
fering Runs Modern System of
Credits-Ban book Should
BE Worth Face Always
tBy John e. Lathrop.l

HiIttee On DdIlklng ana currency IN
| Washington Mr.. Gage discussed ma
| tional finances and particularly the ma
| tiona 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 1t in the Walsh failure in 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.
er banks, Mr.. Gage said:
MIR. Cages Statement.
"Well, they learned another lesson
and they adopted another principle Il
principle provided for in this nhr
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
the clearing house committee itself to
have full, complete and comprehensive
investigation of each member of the
association. and not only Of each mem
Der, but of every institution that car
ricS the, name OF lHln!S over it that is
cleared or represented in the clearing
house by any clearing house bank: and
| can tell you rs II safe prophecy that
we are at the end of disastrous fail
ure in the city of Chicago by clearing
house banls. since this regime has
come in. am told that Kansas City
has the same thing. AMI other cities
will eventually adopt it,"
Representative Fowler, Republican.
Charles \. 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
banker because he had insured his de.
posits. going into the directors room
and saying: Gentlemen we have i!1-
sured our deposits today. Now ler us
proceed to make some rotten loans"
rs 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 moth ng
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 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 sollcitous
anxious and honest and wise after
they had guaranteed deposits than
they were before?
II 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 valua.
BILE 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 institu-
tons which accept the peoples money
In trust, and has indicated the exact
means whereby, under guarantee
law, bankers would do as now they do
---maint, in an association empowered
to look sharply into financial concerns
which seem to be departing from
sound methods.
His reference to the John r, Walsh
failure in Chicago was doubtless be-
cause it was known to the country
generally, having been given wide pub
Ncity and therefore most likely to at.
rract attention as an illustration.
However, there is scarcely locali-
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 dlstrust and
the undermining OF confidence in all
banking institutions.
No Delay for Depositors,
1t is quite apparent that under
guarantee of deposits there would be
no alteration OF conditions affecting
banks now, 50 far as concerns espion'
age maintained by one over another.
The important difference, however,
would be that depositors would not be
subject to the annoying, often dlsas-
trous, delays in getting their money
which now they experience when
banks fail.
But, that fewer failures would oc-
cur surely would be one of the re-
suits of such law. Everyone knows
that many runs are precpitated on
banks which are absolutely sound
Many a man. faithful. safe. eonserya'
tive conscientious In caring for the
money of his depOsitors, has suffered