Evening star. [volume] (Washington, D.C.) 1854-1972, 1915-07-11
FINANC1AL-LOCAL AND OTHERWISE
BY I. A. FLEMING.

Bank deposits, the money of the COM
munity in which banks are located, are
better safeguarded today than ever
before, The United States government
and each of the forty-eight states has
placed all financial institutions under
such supervision that decay Is detected
and frequently nipped in the bud be-
fore it has become sufficiently deVel-
oped to involve the depositors; fire.
ouently before the stockholders inter-
ests have been entirely absorbed.
The percentage of loss to depositors
of the national banking system in all
the years of it's existence has been
about 1 per cent, far below the actual
cost of insurance under any plans Tor
the safety that have been devised
Prior to the enactment of the ma
tional banking law paper money passed
current on the approval OF the coun-
terfeit detector, but a dollar In paper
at night might not be the value Of one
cent the next day. State banking was
synonymous with the wild cat cur
rency. Today state banks are consid-
cred on a parity with those protected
by government supervision.
In the District all banks are under
the supervision of the government.
Modern protection of deposits in
many large cities also includes the
private examinations by special exam
iners of the Clearing House Associa-
ton. Neither personal friendship nor
political pull of even the strongest KIND
can in any way affect the private bank
examiner. He has responsibility back
of him that he must serve, and having
located tender spot he must observe
its progress toward recovery or re-
port it to the special committee OF the
clearing house, which Will serve notice
that unless the matter Is quickly at
tended to expulsion from the privilese
Of the clearing house. il member, or
from the privileges of clearing through
a member, either of which means elm
ination from business will follow.
Clearing house associations are all
powerful in controlling banks. Ihat
many of the leading associations have
appointed high-grade expert examiners
10 an evidence that they will not rest
solely on the controller Of the currency
nor on the state superintendent OF
banking. ..
No bank of Importance in city can
close it's doors. voluntarily or other.
wise, without endangerihg other fiscal
Institutions in community. Bankers
would be unable to use deposits to any
advantage il compelled to carry such a
large percentage on reserve as to be
able to stand Independent, with unex-
pected suspensions in the same city.
Runs lead to more runs. Bankers can
sleep better when assured OF sa1ety'
and all safeguards tend to safety.
When the clearing house examiner
gives the alarm the special committee
at once follows in an examination OF
banks affairs, and II there is chance
for rehabilitation helping hand Will
be extended by the association. II, how
ever the affairs of the institution are
in such an unfortunate shape that the
depositors' money is in danger. In the
event of enforced liquidation. with as
sets sufficient to care for deposits in a
careful liquidation the clearing house
will assume the responsibility therefor
and handle the liquidation
When the Chicago National Bank
and two other Institutions, all con-
by government and Illinois authori-
ties, the Chicago clearing house guar
anteed deposits and reassured owners
Of millions of dollars in the failed
walsh banks had SO many millions on
hand that absolute protection alone
could save disastrous results to other
banks, and the protection was de-
cidedly costly to the clearing house
banks
Immediately followed the action es-
tablishing an examiner for the clear
ing house. No loss to depositors has
occurred since.
A few days ago another bank in Chi
cagp was in trouble. The clearing
house examiner detected it early. and
the association. after examination,
guaranteed depositors and saved dis
astrous failure with wide-reach1ng ef-
fleets.
This helpful hand which associated
banks now extend shows decided I'M
provement In the personnel OF the
banking profession and greater de-
gree Of human kindness.
In the late COS a bank failure or two
in Chicago was sensed by the larger
institutions beforehand. and in place of
efforts inaugurated to land deposits
from the falling banks, even on the
eve Of failure.
They do things differently nowadays.
Banking Less Profitable.
Banking is today less profitable in net
returns than it was few years ago.
Bankers then generally insisted on the
full legal rate and found periods when
full available funds would be employed
profitably.
The release of millions of dollars Of
reserves by the enactment Of the federal
reserve law and the dullness in business
has caused a very heavy reduction in
rates and subsequent loss Of profits to
bankers. which the general dullness in
business has intensified through keeping
large amounts Of idle funds In banks.
When high grade six-months' paper can
be placed at per cent bank revenues
cannot compare favorably with those of
the fat years Of per cent and urgent de-
mand for accommodations City corre-
spondents are loaded with country money
on which they must pay per cent, even
at the time when crop moving is under