Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-05
SEES j. S. BANKING
ON SOUNDER BASIS
R. C.. Stephenson Says Fail
ure of Weak Institutions
Will Have Good Effect.
BY the Associated Press.

BY the Associated Press.
NEW YORK, January 5.-Rome C..
Stephenson, president of the American
Bankers Association, said in a state
ment yesterday that 1--WE will have the
strongest banking situation we have ever
enjoyed and one worthy OF the highest
confidence of all our people" as result
of the elimination of "undeniable weak
nesses" in the country's banking struc-
ture in 1880.
Mr.. Stephenson asserted most of the
closed banks will pay in full or large
part, so that the amount lost would be
reduced. He said also that despite the
prominence in the news of banking diff
cultieS, only small fraction OF the total
banking figures are affected"
Asserting it Is the public in the end
who pays the main part of the penalty
if unfortunate results follow upon de-
partures from sound banking practice,
Mr.. Stephenson maintained that the
soundness of banking as a practical
matter of fact Is "a community problem
In which the public has a part TO play
as well as bankers and Government off,
Gals
Government Function Defined.
Dwelling at length on the relation
ship of the public to banking stability,
Mr.. Stephenson said:
THE function of Government in
banking Is to promote and enforce care
full banking administration through the
system of examination and supervision.
This, however, does not relieve the indi-
vidual depositor from the necessity of
judging and choosing carefully as to his
banking relations. He must inquire for
himself into the character and type OF
institution and men he shall do business
with, satisfying himself as to their repu-
tation, reliability and capability. These
qualities are essential TO complete the
element of safety and dependability in
any human institution.
THE past year has been severe one
for banking as well as all lines of bust
ness. Banking in some instances and
in some localities has reflected una
voidably something of the character and
conditions of the times through which
we have been passing.
Looking back, we realize that much
that was unWise crept into some OF our
business activities. While upon the in
dividual bankers there rests without
qualification the direct responsibility for
the prudent, honest conduct of their
institutions, nevertheless the soundneSs
of banking as a practical matter OF fact
is a community problem in which the
public has part to play as well as
bankers and Government officials"
Stronger Situation Predicted.
The public can exert an influence in
shaping the character of banking also,
he said, by supporting the purposes OF
bankers Ito maintain intelligent inde-
pendent and honest banking super
vision"
In many cases of bank troubles the
only thing wrong with bank was an
unduly suspicious and apprehenslve
state of mind in its customers, Mr..
Stephenson said, created by no act or
condition of its own, but by baselesS
rumors which sometimes led them to
destroy the value of their own deposits
by demanding them Immediately, 1orc-
ing a bank to sacrifice its assets and
otherwise disrupt its financial opera
tons"
Mr.. Stephenson reminded the public
that deposits are not kept as cash, out
are invested in loans and securities, and
even the soundest assets of this type re-
uuire some time to reconVert at full
value into cash deposits.
In conclusion, he. said:
THE events of the past year have
brought about, am confident. strong
er banking situation by eliminating
some undeniable weaknesses.
| / feel that we can truthfuIly say we
will have as a result of these unhappy but
curative conditions the strongest bank
ing situation we have ever enjoyed and
one that Is worthy Of the highest con-
fdence of all our people"