The Mena weekly star., 1919-12-18
DEPOS|TORS MAY
 BE REPRESENTED
London Financial Circles Hurried by Suggestion That They Have Place tn Direction of Business Using
 Their Money.
By FLOYD MAcGRIFF International News Service Stan
 Correspondent.

Correspondent.
 London. Dec. 12.-That all deposi- tors should have right to part con trol of banks is the proposal put for ward by the London Daily Express, which is fighting England's alleged money trust. Financial circles are ra- ther Hurried by this suggestion. which, it is known emanates from Lord Beaverbrook who has no little reputation both here and in New York us a financier
 The Daily Express points out that the bulk of the assets of any bank belong to the depositors, but the op- eraticn of the banking business mainly dealing in credit-is in the hands of a minority interest-~the shareholders.
 The proposal for depositors shar- ing in the management of banks is the most revolutionary that has ever been presented 10 the worlds bank ing center. But the Daily Express de fends it thus:
 "The usual objection raised to giv- ing the depositors a voice in the man agement is that the shareholders have an uncalled liability which con stitutes the bank reserve, and that this fact gives them a special claim to consideration which might be ieop- ardized by the action of depositors with no such liability This unealled liability is the guarantee of the safety Of the depositors money. Even where an adequate guarantee of this charac- ter exists it ought not debar deposi- tors from fair representation in direc- ton As a matter Of fact the policy of the money trust has been to reduce or abolish this bank reserve by a process best described as the teleseoping of credit
 "The method is as follows Bank A and bank B wish to combine. If they made a proper amalgamation they would, of course, simply pool their assets, and the uncalled liabil- fty of each set of shareholders would go into common stock the uncalled liability of the bank would equal that of the two separate ones put to- geher and the credit of the whole con cern remains unimpaired.
 .'But the money trust does not op- crate this way at all. On the contrary, Bank A buys a controlling interest in Bank B by a purchase of Bank B's shares. With this transaction the un- called liability or reserve of these shares simply vanishes, and the ulti- mate resort of the whole credit of both banks depends on nothing but the un- called liability of shareholders of bank A, the purchasing bank.
 This is telescopihg of credit and should be made Illegal by prohibiting one bank from holding shares fn an- other Sound banking demands that liability should be distributed over as large a number of individuals as pos sible. The present tendency is pre- eisely in the opposite direction"
 And here the Express cites several recent bank consultations along the lines described II calls upon Parlia- naent to put stop to the practice at once by preventing one bank purchas- ing shares in another insisting upon genuine amalgamation when it Is so desired. so as not to destroy the banks uncalled liability
 The Express also urges depositors 10 get together and insist on sharing in the control of banks.