Democratic messenger. [volume] (Snow Hill, Md.) 1869-1973, 1908-09-26

age maintained by one over another.
The important difference. however.
would he that depositors would not be
subject tn the annoying. often disas-
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 ~ such law. Everyone knows
that many runs are precpitated on
banks which are absolutely sound
Many a man. faithful. safe. conserya
tive. conscientious in caring for the
money of his depositors. has suffered
runs caused by some rumor started
through malice. Many an honest
banker has had his heart broken by
senseless runs. and has groancd In
spirit as he realized that gross injus-
tice has been done as reward for ear
nest and able Keeping 81 the trust re
posed in him by his depositors.
The Barring Failure.
When dozen years ago Barring
Brothers. OF London. suspended It was
due to that very espionage by other
bankers to which Mr. Gage refers.
The Earrings had embarked In many
South American enterprises. some Of
which were manlfestly unsafe.
The governors Of the Bank OF Eng
land. sensing the danger. refused TO
accept securities backed by them as
basis for the issuance OF bank notes
under the custom OF that country; that
action never has been adversely criti-
cized in any country. although il has
been discussed ever since the world
over.
Modern business is conducted on the
basis for the issuance Of bank notes
lie actual money passes from hand To-
hand
Modern System of Credits.
You 20 to your bank with a bundle
OF checks and drafts and deposit them
to your credit Against that account
thus opened. you draw checks They
pass into the world OF business. ar"
accepted nj face value. ana clrru
late virtually US does gold. silver and
currency. II YOU pay your bills In
checks. often you pass through weeks
at time when you have only n triilr
Of loose change in your pocket Tor
street ear fare and the small things
you need from day TO day costing too
little 10 bother 10 draw check.
Il check cancelled is Il voucher.
has brcomc u maxim In the business
world
Complications of the System.
This complexities business and forces
all banks TO associate themselves In
clearing houses. and probably the pub
lie would be amazed were they TO
know AT times how sharply the clear
ing house committee looks into meth
dds employed by its members.
In the panic that began last October.
funds were carried from bank TO bank
taken SYSTEMATICALLY through the front
doors. tina, depostors might know rhat
other banks believed In the soundnc,s
OF the institution which had been Mt
tackled by Il run. and performed al
most every essential OF the guarantee
system.
Why?
Simply because the modern business
system is So complicated and So little
actual money passes current that each
bank must know that the others are
properly safeguarding themselves and
also that they are permitting the ear
rying Of accounts by depostors whose
paper may always be depended on as
worth face value.
Beneath the Surface.
So beneath the surface. one could
witness the clearing house associa
tions examining collateral. securities
and assets. and often serving not .r
on n given bank that the aSsociat IN
will require some change in methods
on penalty OF refusal longer TO clear
for that hank.