Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-08-07
BIZ I. /. FLEMING.


Federal Reserve system, in which the
District Of Columbia is grouped the
first four months ANA Is days Of this
year there were - banks passed out
~ failures Since 1920. 3l1 banks in
this district have failed.
The df:b district also includes Mary
land. North and South CarVhn3S, VII
. ginia and West Virginia.
| 1t is splendid record for the MS
| trict of Columbia that neither IN the
| first four months OF this wear nor in
! the longer period has there been q
/ bank failure.
This proud record has not been ac-
| C0mpiished except by the "harne9t
| watchfulncss ON the part Of the clear
! ing house. the District Bankers A&s"-
! citation and the Office Of the controller
| Of the currency and its examiners,
There has been some house clean
| ms. some applications of the cau>tr
! stick To sore spots for the general
| benefit Of the community and the re-
| duction of the number of banking IN
situations bv the elimination of weak
sisters. II is possible also that share
holders In some of these wo3kllnES
that have passed on: during the iaSt
few wears have been able to N1ul-
date their stock holdings at par, but
not a dcpositor lost one cent.
Even Mere Remarkable.
In the interim from 1920, some ~
hanks in this district have talled, hN'
not one in the District ot totunho3'
making the record even more Crtd''-
able to those responsible for the care
full steering of financial craft OF our
city during the strenuous years.
But % Of the banks We're members
If the Federal Reserve System, the
others being state and savings bank
institutions.
In 1926. throughout the United
states. thera were 926 member banks
that closed their doors with deposits
of S2S5. 0Uo 000
In this regional district Maryland
has shown a splendid record, also, hut
conditions have been very unfavorahie
in South Carolina. n little better in
North Carolina. with Virginia and
West Virginia having considerable
trouble.
district in a recent address. speaking
Of the growth of the banking bust
ness in the last few years said:
"But there is another matter which,
to nv mind, is one Of transCendent inn
portance to bankers. NotWthstand-
ing the aggregate growth Of banking
there has been a most amazing and
alarming mortality among the banks
of this district and amOngn the banks
Of the country.
Legislation Inadequate.
For some reason or other--whether
il is q matter too difficult to be
reached or for other rea sons-legisia-
ton in the several States with rela-
ton to banks is inadequate and reEu-
lation is also inadequate. The banks
themselves are not disposed to vol
unfairly assess themselves for the
purpose OF adequate supervision. and
vet there is nothing more important
than supervision.
1T is amazing to me that the COM
placency Of the people has been what
il has in the face Of such a large
number Of hank failures
There is one banker in our district
whose locality has suffered from many
failures. He said. whether failure
occurred in his locility or elsewhere.
after failures became so numerous in
his State. it cost him $4,000 in de.
posits. In another county he stated
that 100000 was withheld from de.
post in banks
Further Comment
Continuing Gov Seay said: IF the
bankers do not take this matter in
hand themselves l do not believe YOU
have any right 10 look for adequate
legislation by the States.
You should he jealous, as I be
lieve you are, Of banking as a pro
fession. and you have no more impor-
tant question 10 consider.
This hank receives nunerousu let
ters from wouId-be depositors asking
for the names of safe institutions in
which money may he safely deposited.
OF course we never answer these
queries, as It is not our business
There is some doubt In my mind
whether we realize the Importance
OF this to the proper extent.
We all know their chief causes.
The city clearing houses and the
county clearing associations can do
the most effective work"
The Federal Reserve System.
Groups of bankers frequently dis
cuss among themselves the great i'm
portance Of the Federal Reserve
System.
ton Of this system was given during
the various Liberty bond campaigns
when billions of dollars worth Of
these bonds We're sold and the war
financed for the United States and
also large part of the cost of the
allies. some S11 600, 900, geo being
loaned abroad. but largely expended
IN this country for munitions and
other war equipment
The old national banking system
would never have managed this task.
as the banks advanced freely on bonds
as security and in turn used them for
collateral with the Federal reserve
banks for loans to bond buyers.
Big Credit Transaction.
Gov. SeaY. referring 10 the impor.
lance q the system, said:
"The other day the largest credit
transaction that has ever been put
through in this country. involving the
payment Of Old securities. the issuing
Of new and the collection Of income
taxes. making a turnover of close to
81 600 600 600, was accomplished by
the reserve system and the Treas
ury Department in most amaz.
ing manner ana with hardly a rinple
on the stream Of credit anywhere In
the country. SO that this country
ana ! think We Of the Federal Reserve
System have "a right to call your at
tentjon 10 jt-~fniuys throughout It's
| banking system the greatest financial
prestige Of any country in the world