Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1912-01-09
PANIC INSURANCE.

Inc movement 1Or felOTH IN our
banking laws which has received the
attention Of the biggest merchants in
our country as well as the endorse
ment Of the American Bankers Asso-
citation is of more concern to the
American farmer, business man, and
wage worker than it is to the banker.
In our modern system Of commercial
exchange the banker performs two
functions. that of trustee for other
peoples money and that of a common
carrier Of commerce in that he per-
forms the exchange of commodities by
the use Of money or credits. The
manufacturer who employs labor de-
ponds largely upon the banks for the
extension or even the continuance Of
employment for his men The farmer
depends upon the banks to carry him
while he feeds the crops he has raised
into the condensed form of meat or to
carry him thru the growing season if
he Is grain farmer.
In times Of panic the American sys-
tenn of separate and individual banks
breaks down because each bank stand
ing alone rust1es for itself and all make
a rush for the door Of larger reserves
follows panic in a theater when
every fellow acts for himself
In our large cities the banks have
organized into clearing house associa-
lions wherein they all stand together
in stormy times and by issuing clear
ing house certificates or checks bust
ness goes on with the least Interrupt
ton. It Is now proposed to federate
all the national, state and savings
banks into a national clearing house
association divided into districts and
sub districts and mutualized so far as
is possible so that every bank in the
land will be federated with every other
bank for the same protection in times
of stress that the city banks now
enjoy in their clearing house associa-
tons. This reserve association as it
is to be called is to be allowed to
issue bank notes Just like the bank
note money which We now have in
circulation except that instead of gov
eminent bonds being held to secure the
payment Of the notes the combined
assets of all the banks in the country
and the capital and assets Of the ma
tional reserve association are to be
back of these bank notes.
When the plan Is in operation any
bank can rediscount good commercial
paper, that is it can sell to the reserve
association the short time notes of
mercial standing whenever it finds a
greater demand in its locality for loans
than it is able to meet alone. Note
brokers are now performing this ser
vice for the largest business concerns
and exact a commission toll. They
accept short time notes in denomina-
lions of a few thousand dollars and sell
them to banks which have surplus Of
funds With the reserve association
in force there would pc a national
clearing house for all banks to equalize
the good loans requested by business
men and farmers and the combined
banking capital Of the nation would
thus become available in every com
MI: ity. The idea is an ideal one. The
only serious problem will he to protect
the little fishes from being made food
Of by the big fishes and this has been
accomplished to the satisfaction Of the
bankers all over the country, who
unanimously endorsed the plan in the
national convention of the American
Bankers Association.