The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1931-05-28
SAFETY FOR MONEY


An abnormal number Of bank fall
ures that have occurred in this country
during the past ten years has tended
to lessen public confidence in the bank
as safe place in which to keep sur
plus funds. There is reason to believe
that the amount of money involved in
bank losses has been over-estimated
and that the public depreciation of
confidence in banks is unjustifed.
The fact is that while some banks
have failed and some losses to de-
positors have occurred, public critic
ism of banks has been out Of proper
ton to the losses. Much greater loss
es have resulted in other financial
fields with little or no i'll effect. The
bank losses have been over-advertis-
ed, exaggerated and deplored while
other losses have been accepted as
matter of course.
Consider, for example, the losses in
stocks and bonds.
First, it might be well to recall that
the decreased confidence in banks has
caused numerous persons to seek
other places in which to put their
money. A great many so-called fin
ancial experts have advised invest
ments in stocks and bonds as perfer-
able to certificates of deposit. Stock
and bond statesmen have always been
quick to take advantage of any sus-
picion of banking safety and to urge
their ware in preference. The result
has been that out Of every commune
ty large amount of money has gone
for the purchase of industrial stocks
and bonds. The word "gone" is used
advisedly for much of it has never
come back.
Now, a comparison. During the ten
year period preceding January LIST,
bank failures in the nation tied up
total of approximately two billion
dollars. AS liquidation proceeded
some of this was released to the de-
positors; in some cases banks paid
out 100 per cent, and in some cases
there was a total loss, but it would
seem conservative to assume that the
actual loss was not more than half of
the amount involved when the banks
were closed.
On Sept. l, 1929, the high point of
the market, the value of listed stocks
on the New York exchange was ex-
cess of 80 billion dollars and listed
bonds in excess of 40 billion dollars.
The value of listed stocks on the New
York exchange Jan. 1, 1881 was about
40 billion, and bonds AZ billion. In
this period between Sept. l, 1929, and
Jan. 1, 1881, owners of stocks lost
SAC, 648, 1896, 1896 and bond owners lost
81 ,908, 952, 709, total of Approximate
ly AZ billion dollars. This represents
the loss on the New York exchange
alone, and there are other exchanges
in every principal city of the nation
in which the losses are proportionate.
1t represents the loss to investors in
listed stocks and bonds only, and
does not consider losses in curb trad
ing. The figures for New York can
not be more than half of the total, on
which a conservative estimate would
be 100 billion for the nation in less
than year and half.
Compare that with the total of two
billion tied up in closed banks in ten
years, part of this repaid in liquida-
ton, and ask yourself which is the
safer place for your money.
Banks, like other business institu-
tions, are operated for profit to their
owners. At the same time they per-
form an important function in the
whole business structure of the COM
munity. Every other business and
nearly every person proceeds at
disadvantage without them.
Selfish interests as well as COM
munity interests, demand that you
have and build confidence in the value
and strength of banks.-Appleton
Press.