Evening star., 1934-02-09
BANK INSURANCE
HALTS FAILURES
p7 Pct. of DepoSitorS Now
Are Protected by Gov
ernment.
BY DAVID LAWRENCE.

More than 80 days have passed
Without a bank failure in the United
States.
Ninety-seven per cent of the people
who have money in the bank now are
Insured against loss by the Govern
n1ent itself.
These facts are the result of the
Insurance deposit plan which has been
but into effect by the Roosevelt ad-
ministration, whereby all deposits up
to $500 now are guaranteed.
As a consequence of this important
step and the need for slowly digesting
6he many problems involved in the
new system, the administration prob
ably will ask Congress for the post
ponement for a year or of the pro-
vision of the law which next July
would increase the protection to In
Clude all deposits up TO $500,
Many State laws and State consti-
tutions would have to be amended to
make possible the second step, so 1t is
being deemed wise to postpone the
$500 provision for all banks for at
least a year.
OmClalS Gratlfled.
Officials here are gratifed over the
remarkable response given the insur-
ance plan by all the banks. The lat
ter are not now opposed to the insur-
ance of deposits up to $4,000, but
doubt whether any larger sum should
be covered.
Unquestionably, with the greater
confidence that exists in the banks Of
this country today, it is possible to
consider ways and means of improving
credit conditions. There is a demand
for one or two year capital. which the
banks, in cooperation with the Gov
-ernment, may be able to furnish. 1t
all depends on what supervision of
lending is to be exercised and whether
the insurance plan succeeds, but at
the same time the Government recog-
nizes that idle money in the banks is
not going to make it possible for the
banks to earn on their stock.
So for the next few months there
will be much discussion here Of meth
odS of improving banking practices
and making it possible for the banks
TO serve business and their commune
the last three years of the depression.
Bank Reopenings Pushed.
incidentally, the controller of the
currency is doing remarkable clean
up job on the closed banks He has
been aggressively pushing ahead to
reopen as many banks as possible. To
date there are only 345 of the un-
linpncpH of
which went into voluntary or involun-
tary liquidation. These 345 banks
have deposits of about s34O,OOOOO
1t is interesting to note that the
banks in receivership have a total of
about S900,000,O00 in deposits unpaid
out of the s1,7Oo.OO0,OOo which they
had at the time they closed. This Is
approximately so cents on the dollar.
In all the history of national banks
since the days of the Civil War. the
average return to depositors of closed
banks has been about 66 cents on the
dollar over a period of years. To get
30 cents, therefore. within year is
quite an achievement.
Loans and Depositors.
The R. F. c. has loaned about
$l00000,000 on closed bank assets,
which has been helpful. indeed, in
getting money to depositors.
1t should not be assumed that only
30 cents on the dollar will be returned
out Of closed banks or that every de-
Positor In every bank will get so cents
bn every dollar of his deposits. These
figures are based on an average for
the whole country. In some instances
rs and 80 per cent of the depositors'
money has been returned. depending
on how good the assets of particular
bank happened to be and the oppor-
tunity for quick liquidation In some
banks only a portion of what will ul-
timately be realized has been paid to
depositors
But assuming that the return is so
cents on the dollar many officials
point out that losses on money invest
ed In bonds and stocks and real estate
have in many instances amounted to
more than so cents on the dollar, so
that, taking the losses of all kinds in
the depression, the banking system
may some day be revealed as having
no greater proportion of losses than
other forms OF investment.
(Copyripht, lQ3i)