The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1933-03-09
The Banking Situation

w yHEN and on what basis the nations banks will
\X/ reopen is still question at this writing but the
w situation is highly enightening and prooaoy
is the forerunner of sound banking structure.
The fact behind the holiday is that Withdrawals
scared the bankers particularly in large communtes
It seems there 40 billion dollars OF deposits anu
about seven billions of currency and the public was
+,;no r. oet the former converted into the latter
With our system of checking accounts which serve DIS
money there should be necessity Tor having DIS
much currency there are deposits.
AMONG the fallacies now disclosed is the old story
that the bigger the bank the safer it is The IDEA tha
we would have perfect organization once chain and
group banking had fully developed probably is Tor all
time exploded. Wise investments make BANKS not the
amount deposit. .
The only advantage the big banker had when his
time of reckoning recourse to hlgh oIncais
who could declare holiday The fate OF bills wnlcn
might have saved smaller banks is too well known IN
this county.
The need of closer supervision of our larger banks
is apparent in the disclosures of irregularities which
had much to do with destroying the confidence OF the
public Some of ''big men" have been greatly de-
fated via depression.
Although prone to criticize individuals who with
drew their cash in haste when reports were unfaVor-
able bankers cannot expect the public to trust an in
sttuton which sells securities" which later prove
worthless. Mixing the banking business and the brok
erage business, practice in large banks, has
proved unw;se.
Politicians are quick to urge guaranteeing OF de-
posits by the government as a storm breaks
Naturally it is the popular stand the vote-gettlng
stand but it appears from here that the government
has handful with foreign affairs the current de-
felt and the tax burden We understand that attempts
of states to guarantee deposits to bad end and
cost the taxpayers considerable.
saner proposal might be to take the government
out of the banking business entirely, step which
might have saved hundreds of banks including of
the dozen and half institutions forced to fold up in
Redwood county in recent years. few years ago only
widows and orphans put their in postal savings
But when the banking storm broke, millions of dollars
which might have bolstered home institutions was sent
away in this True the local bank can be the
depository for this money but when it is it must first
buy government bonds in the amount, as colat-
eral that the money for the bonds leaves the
community.
Coming as it did on Inauguration day, the smiles
and cheers on that occasion must have been somewhat
forced But if the cheering dmmed some then
there is reason to compliment ourselves selecting
man for president who can conduct himself the
executive has,
We have seen frank meeting of the emergency,
a swift to counteract it. We have seen co-opera-
ton enlisted Immediately and cool, made
to bolster the nations banks and speed recovery.
Meanwhile the American public has acted admira-
bly,. No riots, calamity howling-we have simply
moved forward swiftly could without the
banks and accepted the nationwide closing just
other step the path we treading
When this is disastrous will be prevent
ed. We will not be standing in line waiting for our
turn to withdraw our money hoping the window will
not be pulled down before reach it. Whatever the
solution will all be treated pretty much alike.
Congress jumping into action is an encouraging
sight Perhaps it will gain enough impetus with this
accomplishment to take further forward steps.
The pessimists have told us all along that would
know when we hit bottom That there had been
upturn yet. Surely this is the bottom There is but
one direction left to go UP-and taking that
direction at