The Penn's Grove record., 1909-03-05
Former Secretary Gage and Con.
gresham Fowler on the De-
post Guarantee.
THE WALSH FAILURE CITED
Clearing House Action Like Plan Pro
posed by Democrats.
yards Against Honest Bankers Suf.
fering Runs Modern System of
Credits-Bankbook Should
Be Worth Face Always
[By John e. Lathron I

sHe treasury, may De regarded as Suf-
hclently conservative" to obviate
fears that he would be "unsafe' in his
banking views. Before the house COM
mlttee on banking and currency in
washington Mr.. Gage discussed ma
fional finances and particularly the ma
nenal bank. He sought an illustration
of Tie idea he was expressing, which
! n general was in support of the guar
antee plan. and like many others
found 1t in the Walsh failure in Chi
cago.
After explaining how the clearing
house banks took over the assets of
the failed institutions, guaranteed all
depositors, and prevented runs on 9TH
err banks, Mr.. Gage said:
Mr.. Cages Statement.
"Well, they learned another lesson
and they adopted another principle. a
principle provided for in this the
Fowler) bill. By the vote and vol
untary compliance Of all the members
of the Clearing House association,
they authorized the clearing house at
any time and at stated periods to act
upon its own volition and on it's own
account, and for the information of
the clearing house committee itself to
have full, complete and comprehensive
investigation of each member of fine
association, and not only of each men,
Der, but of every institution that car
RE the name of bank over it that is
cleared or represented in the clearing
house by any clearing house bank; and
1 can tell you as a safe prophecy that
we are at the end of disastrous fail
ure in the city of Chicago by clearing
mouse banks, since this regime has
come in. 1 am told that Kansas City
has the same thing, and other cities
will eventually adopt it."
Representative Fowler, Republican,
Charles N. Fowler, Republican. of
New Jersey, chairman of the house
committee on banking and currency.
appears in the Congressional Record
with a house speech in support of his
bill which provided for guarantee OF
bank deposits. He specially nswered
the assertion that such a guarantee
would induce reckless banking, saw
ing:
"Mr. Chairman, we are occasionally
met with the statement that guarantee
of deposits would lead to unsound
banking. : Can you think Of a
banker, because he had insured his de-
posts, going into the directors room
and saying: Gentlemen, we have in
sured our deposits today. Now let us
proceed to make some rotten loansP
SIS it not possible that it will occur
to those directors that their losses
must come out of their profits, out of
their reserves. out of their capital. and
out of their regulations? Will they
not realize that they can get nothing
out of the guarantee until the last dol
lar of their capital, surplus and
profits has been wiped out, and stock
holders have been assessed double the
mount of their stock?
The Bankers Reputation.
Until their regulations have been
injured, if not ruined, and possibly
some of them have been started on~the
road to state prison? Can anybody
think that any board of directors Of
any bank would be less solicitious,
anxious and honest and wise after
they had guaranteed deposits than
they were before?
Il assert again. after the most ma
ture elaboration, that f there is one
reason for insuring life and home. 4
there are more than a thousand good
reasons-more than ten thousand good
reasons-why the ~depositors of the
banking institutions of the United
States should be insured"
Two Valuable Contributions.
These two men have offered valua-
Bile contributions to the discussion of
the proposed guarantee of bank de-
posts. MI. Gage has set forth the
present trend of bankers towards a
closer watchfulness over all institu-
tons which accept the peoples money
in trust, and has indicated the exact
means whereby, under a guarantee
law, bankers would do as now they do
-maintsin an association empowered
to look sharply into financial concerns
which seem to be departing from
sound methods.
His reference to the John r. Walsh
failure in Chicago was doubtless be-
cause it was known to tie country
generally, having been given wide pub
licity and therefore most likely to at
tract attention as an illustration.
However, there is scarcely a local.
ty wherein bankers in late years have
not gone under topping banks and up
held them by guaranteeing deposits
wholly or in part, in order to help in
the quelling Of popular distrust and
tbs 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 depositors 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-
of such a law. Everyone knows
that many run are precpitated on
banks which are absolutely sound
Many a 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