The Washington herald., 1908-02-14

diseomting paper or making further
loans l think that is all the law in
tended"
Senator Aldrich explained that the
banks were supposed TO keep their affairs
ia such condition as 10 prevent any neces-
sity for touching their reserves. but II an
emergency arose they would be justified
in using their reserves 10 pay lawful de-
posit obligations. To this Senator Bailey
replied that the only difference between
himself and the Senator from Rhode
Island on this question was IN the use Of
the word emergency" Such occasions
constantly arose in the daily business Of a
bank. he said. .1and they could not prop
ery be called emergencies.
Not Properly an Emergency.
Senator Hopkins, of Illinois, asked the
Senator from Texas whether such sit
uation would not constitute an emer-
gency In the case of that particular
banks affairs
NO" replied Mr. Bailey; because
banks do not usually keep on hand more
money than the law requires. They lend
down to the very red line. and If some
body comes 10 them for loan, they very
properly say 10 him: No. J am down TO
my reserve limit But they could not
say that 10 a depositor who asked for his
own money. The very law which pro-
vides that the banks shall repair their re-
serves is an implied permission TO impair
the reserves"
Senator Flint, Of California, asked if
the occurrence Of 1t condition such as the
Senator from Texas described. in banks
affairs, would not be just such an emer-
gency rs would allow the bank To call for
some Of the emergency currency provided
by the terms Of the Aldrich bill. Senator
Bailey did not think so.
Hepburn Champions DepositoFs.
An impassioned speech was made by
Senator Hepburn. of Idaho, in support of
the right of a bank 10 use its reserves TO
pay depositors when other funds had been
exhausted. He argued that just as an
individual draws on his reserve force Of
strength and vitality when His natural
resources are exhausted. and just as an
army draws on its reserve corps when
the line OF battle is too closely pressed
SO should a bank use It's reserve when
depositors are clumoriuE for their money
and its usual resources become exhausted
It would be as just To deny tine individual
or the army commander the right 10 call
up reserve strength ne Contended, as it
would be to imply that bank should
deny their money 10 depositors So long as
u had q dollar In its vaults.
The depogitors OF a bank. he declared
have a claim on an Tie funds or a bank
To the extent To which the bank is iu
their debt, that takes precedence over all
other claims. even those of tie bank
stockholders who are simply, be said. q
number Of men associated 10 do business
on other peoples money without paying
them any interest for g.
Attacks LeHding of Reserve.
Senator Hepburn also attacked the po-
vision in the present Jaw which allows
country or interior bank 10 deposit an
but per cent Of its reserve in banks lu
central reserve cities
Senator Elkins. Of West Virginia, i1
short and succuct speech. supported the
contention thar the proper Use of reserves
is 60 discharge obligations 20 deposit0rs,
after other resources fail.
Senator Culbers0u also took part In the
debate. 10 the extent Of explaining
previous utterauces Of his own upon the
subject,