Aberdeen herald. [volume] (Aberdeen, Chehalis County, W.T.) 1886-1917, 1908-10-01

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The important difference, however,
would be that dcpOsitors would not he
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 q law. Everyone knows
that many runs are precpitated on
banks which are absolutely sound
Many q 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 dcpositors.
The Barring Failure.
When 4 dozen years ago. Barring
Brothers. OF London. suspended. 1t 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 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 it has
been discussed ever since the world
over.
Modern business is conducted on the
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 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, are
accepted at face value. and cir, IL
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 trihe
CT 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 d-aw check.
"A check cancelled is a 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 now sharply the clear
ing house comn!ittee looks into meth
obs employed by its members.
In the panic that began last October,
funds were carried from bank to bank.
taken ostentatiously through the trent
doors that dciso&itors might know fiat
other banks believed in the soundneSs
OF the Institution which had been at
tackled by a run. and performed al
most evc,y essential Of tie 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 car
rying of accounts by depositors whose
paper may always be depended Oh as
worth face value.
Beneath the Surface.
SO beneath the surface, one could
witness the clearing house assoca-
lions examining collateral securities
and assets and often serving notice
on n given bank that the aSsociAt on
viii require some change in methods
on penalty of refusal longer to clear
for that bank.
Banks Out of the Association.
How about banks not in the aSSo'a-
ton? Many perfectly sound banks are
not directly in the clearing house.
They clear through another bank
which does belong.
Precisely the same rule appl cs TO
tnNn, TOT. wien Utttl ARISES. l|It uSSt-
citation serves notice on the memher-
bank which clears for the noN-aSSo-
citation bank as to what will have to
be done; and it is done promptly, too,
in every instance.
Eank- Book Should BE Worth Face.
The essence of the guarantee plan is
that Il bank book should lie worth IFS
face always. I'm entry il Il pass book
should not constitute the assumption
Of risk by the depositoT and the Civ
ing of wide latitude to the banker.
Such entry should he recognized as
Just as actual an asset as Il bank note.
Also, proper arrangements must be
made for the continued espionage of
banks by other banks.
Lastly, and quite rs important.
banking laws must be enforced; over
ccrtihcation must be stopped: loaning
Of funds in national banks Oh obvious
ly speculative schemes must cease:
and other reforms must be wrought to
invest the bank ing system Of the
country with thai complete confidence
which, if induced would put IA stop
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