The Evening statesman. [volume] (Walla Walla, Wash.) 1903-1910, 1908-10-08

age maintained by one over another.
The important difference, however.
would be that dcpositors 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 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 b.
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 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 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 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, are
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 trifle
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 q check.
"A check cancelled is voucher"
has become a maxim in the business
world.
Complications Os the System. !
This complexities business and forces
all banks to associate themselves il
clearing houses. and probably the pu3-
lie would be amazed were they tt
know at times low sharply the clear
ing house committee locks into meth |
DDS employed by its members.
In the panic that began last October. |
funds were carried from bank to bank. |
taken ostontatiously through the front |
doors that derOsitors might know tia. |
other banks believed in the s0undncSs I
of the institution which had been at |
tackled by run. and performed al /
most every essential CT 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 car
ryi1g Of accounts by depOsitors whose |
paper may always be depended On as !
worth face value.
Beneath the Surface.
SO beneath the surface. one could |
witness the clearing house associ:-
lions examining collateral, securities i
and assets, and often serving notice !
on a given bank that the association !
will 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 associa- |
ton? Many perfectly sound banks are |
not directly in the clearing house. |
They clear through another bank |
which does belong.
Precisely the same rule apples to
them, for. when need arises, the assO-
citation serves notice on the member |
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.