Staunton spectator and vindicator. [volume] (Staunton, Va.) 1896-1916, 1908-02-07
About Banking.

Senator Culberson of Texas has in
troduced three measures which the
Washington correspondent for the
Philadelphia North American des-
crlbes and, at the same time, contrasts
With the Aldrich bill in this way: 1.-THE
first provides that banks shall be re-
q quired to hold in their own vaults the
reserves required by law, instead OF
depositing them in reserve cities. The
purpose of this is to prevent exactly
what occurred recently. In this
country when interior banks were
crippled and forced upon a clearing
house basis because they could not
withdraw from New York and Chicago
the funds deposited by them in those
two cities. The second bill provides
that interest shall be charged the ma
tional banks for government deposits,
and the charges are graduated so as 10
insure the return of the deposits to the
treasury at least once year. In
September, October and November,
the crOp-movlDg periods, the interest
charge is made two per cent. In De-
cember, January, February and March
it Is increased to four per cent. In
the summer months the rate is made
six per cent Senator Culberson's
third bill provides for an insurance of
deposits by the banks themselves
operating in conjunction with the
comptroller of the currency. When a
bank In the association fails the comp
troller shall assess all the other banks
so as to meet Immediately the deposit
demands against the failed institution.
The assets of the failed bank shall then
be taken in charge by receiver and
administered for the benefit of the
other associated banks. 1t is in con-
trast with these measures that the
Aldrich bill suffers most. Aldrich
and other representatives of the finan-
cial interests see no plan by which a
recurrence of the recent situation can
be prevented except by increasing the
power of the banks. They would let
the banks use all the money Of their
depositors In promotion OF schemes ard
gambling in securities, AID then use
some of those same securities as the
basis for additional money with which
to pay their depositors. They would
make an initiation of the currency sub
ject to the ability of the banks to OBJ
tain high rates of interest from stock
gamblers. They would remove from
the banks the spiIi of caution which
should prevail In their management,
by making it possible to exhaust the
visible supply of money and still pro.
duce more. They would open the way
to jObbery with respect to the securi
ties which are to become the basis of
the new bank note issues. and increase
the credit of railroads at the expense
of better conducted and more trust
worthy business institutions. Strange
as it may seem, the Culberson bills
might pass the senate and still make
the passage of the Aldrich bill no less
probable. While diametrically oppos-
ed In principle and while aiming to
produce the same effects in preventing
panic and currency stringency, their
actual provisions are not In conflict.
The reason is that they start in differ
ent directions and upon entirely differ
ent theories respecting the causes of
the recent collapse and failure of the
national banking system. Aldrich is
proceeding upon the assumption that
the way to make the banks absolutely
sound and the currency adequate to
any possible business needs to make
the money supply virtually inexhaust-
ible. This carried to it's logical con-
elusion. is imitation pure and simple"