Askov American. [volume] (Askov, Pine County, Minn.) 1914-current, 1934-01-25

~ COHmSTCldI Ddnk HOL paying any
interest on deposits could extend loans
to it's customers, say not to exceed
80 per cent of it's deposits, with safe
ty on 80, 60 and 80 day liquid paper,
and the Sc per cent cash on hand
would be ample to meet all demands
of withdrawal of commercial deposits.
The interest received by the bank on
its One-third of deposits loaned out
would, with other earnings, give an
income to the bank.
A charter to bank should not
be granted unless the commercial de-
posits of given area would war
rant same. One cause of bank fail
ures has been the granting of too
many charters to banks in the towns
where there were already banking ia
cilities. These new banks offered a
greater rate of interest and at the
same time larger loans to gain bust
ness, and today, as result, banks
out banks.
But again, the money lost to de-
pOSitorS In banks is insignificant COM
pared with the loss of investors in
stocks, bonds and real property, which
is twenty times greater than the loss
in banks. People bear it and grin
when you lose other Investments, but
curse and never forgive or forget
what they lose in banks.
This brings us down to government
guaranty of deposits. | ask, why
not guaranty of the government on
other investments?
In 1913 this government had out
standing less than billion dollars
of government bonds. Today there
are some 23 billion dollars outstand-
ing, drawing interest of which the
government pays about $50 millions
a year. The issues of government
bonds are guaranteed by its people.
The issue of money by the govern
ment is also guaranteed by it's people.
The money volume issued should
be based on the volume of business
done in the United States, and not in
exchange for gold. Federal bonds
are mostly absorbed by the wealthy
SldoS anu lHC OctuhS. ENSly uC1ldl
invested by banks in government
bonds takes that much money out of
the locality of the bank for home
use and investment, and retards local
business.
Authorization by the Federal Re-
serve Bank to issue notes goes to
banks and other authorized govern
ment organizations borrowing on col
lateral at a rate of interest which
is tripled before it reaches the local
borrower for commercial stimula-
tiOns. The rate is too high. If the
government issued its own money to
the Federal Land Banks and other
similar institutions, the rate of in
terest could be 2 per cent to the
borrower, taking up part of the gov
eminent bonds and paying back to
the holders, mostly wealthy people,
who pay no taxes on such investment.
They would then make other invest
ments and open up the avenues of
trade everywhere, as money will seek
investment.
This would get us away from pay
ing tribute by paying a high rate of
interest, and for that reason, if for
no other, the Frazier bill should be
passed by the present Congress-. Agri-
culture is the recognized foundation
of our country's wealth and repre-
sents about one-fourth of our de-
pressed people. Give the one-fourth
of our people earning power and the
wheel of activity will Immediately
start Then the other one-third of
our pOpulace, the laborers, would be
engaged and there would be no more
unemployed.