The newspaper., 1908-10-09

generally, having Deen given Wlue pup
licity and therefore most likely to at
tract attention as an illustration.
However there is scarcely a 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 distrust 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. so far as concerns espion-
age maintained by one over another.
The important difference. however,
would be that depostors would not be
subject to 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 of such a law Everyone knows
that many runs are precpitated on
banks which are absolutely sound.
Many man. faithful. safe. conserva-
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 groaned in
spirit as he realized that gross injus-
tice has been done as reward for ear
nest and able keeping of the trust re-
posed in him by his depostors.
The Barring Failure.
When a dozen years ago. Barring
Brothers. of London. suspended. 1t was
due to that very espionage by other
bankers to which Mr.. Gage refers.
The Barings had embarked in many
South American enterprises. some of
which were manifestly 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 II has
been discussed ever since the world
over.
RlDutTu IL touuutltu tht
basis for the issuance of bank notes
tie actual money passes from hand to
hand.
Modern System of Credits
You go to your bank with a bundle
of checks and drafts and deposit them
ito your credit Against that account
thus opened. you draw checks. They
f,,t. -
accepted at face value. and circu-
late virtually as does gold. silver and
currency. If you pay your bills In
checks. often you pass through weeks
at time when you have only tribe
of loose change in your pocket for
street car fare and the small things
you need from day TO day costing too
little TO bother to draw check.
"A check cancelled is voucher"
has become a 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
ods employed by its members.
In the panic that began last October,
funds were carried from bank to bank.
taken ostentatiously through the front
doors. that depositors might know that
other banks believed In the soundness
Of the institution. which had been at
tackled by 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
ais they are permitting the car
ryi accounts by depositors whose
pa Wly always be depended on as
wor zee value.
Beneath the Surface.
SO beneath the surface. one could
witness the clearing house associa-
tlons examining collateral. securities
and assets. and often serving notice
on a given bank that the association
win require some change in methods
on penalty of refusal longer to clear
for that bank.