Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-08-18

left in the cattle country few years
ago the blame was placed upon the
three years drought and upon the de-
cline in the market value of live stock.
When the same thing happened a little
later in the corn belt and in the wheat
belt again there were droughtS, high
winds and declines in the market value
of wheat, corn and land. Failures OF a
large number of banks in the cotton
belt have been attributed to the boil
weevil and droughts. The failure of a
number of banks in Florida just few
weeks ago was attributed to the raw
ages of the Mediterranean fruit ny.
Scattered through all sections of the
country, isolated failures have been at
tributed to the criminal acts Of bank
officers, such as forgeries, defalcations,
distractions and entertainments.
There are known to science two
classes of causes, namely, proximate
causes and ultimate causes. The proxi-
mate cause is known as the immediate
cause and the ultimate cause is known
as the basic cause. For example. II
several persons are shot as result OF
children playing with firearms IN the
street, the proxfmate cause Of the in
jury is a gunshot wound, and that
would be as far as the medical diagnosis
would go. But the ultimate cause OF
the injury is a defect in the social sys-
tenn which permits children to play
with firearms in the street. Now let
us apply this doctrine to the banking
situation. The receiver Of failed
bank, in making his report of the cause
of failure, confines himself to the prox-
innate or immediate-that is, local
causes. 1t is for the student OF bank
ing to study the ultimate or the basic
cause of failure.
Is Per Cent Rural.
Outside of few isolated cases OF
as the recent failure of a trust COM
pany and of a private bank in New
York City, the bank failure question Is
related almost entirely to the rural
communities. OF the nearly 5000 bank
failures previously referred to, 1t Is
safe to say that rs per cent were sit
uated in towns of less than 5000 pop
ulation. Some of these banks were OLD
institutions intimately associated. VIII
the history and development OF the
local community. Around the founders
of these banks many OF these com
munities grew up. The banker became
the most prominent citizen and his in
stitution was vitality interested In every
type of local business enterprise.
The basic cause for the failure OF
the small banks outside Of the great
commercial, metropolitan cities is the
fact that rural life In America within
the past three decades has undergone
a social and economic revolution which
has made our system of banking a
misfit in the organization OF our ma
tional life. There are several factors
In this great change. The soul-stirrine
experience of the great war had ire
mendous educational effect upon our
population, brought every element In
the outlying communities into contact
with world currents.
Another factor may be attributed TO
science and invention. which has MADE
it possible for the average country
home to enjoy the comforts and con-
veniences which In past years could be
had only by the city dwellers. Elec-
trio lights. electric power. water sys-
TENS, telephones, the radio, and. last
but more important than all the 9TH
crs, the automobile, have abolished dis
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