Evening star., 1935-12-17
BANKING CHANGES.
LAUDED BY ADAMS.
Senator, in The Stars Radio
Forum, Says System
Sound.

Discussing the banking legislation
passed in this administration, Sen
ator Adams, Democrat, of Colorado
said in a radio address last night
that this country now has "a bank
ing system composed of sound banks. y
Senator Adams spoke in the Ma
tional Radio Forum, arranged by The
Star and broadcast over Nation
wide network of the National Broad
casting Co.
The speaker declared it was true
"'in a broad sense" that recent bank
ing legislation placed the country'S
finances under political control, but
it does not follow that the banking
system will be controlled for partisan
political purposes. The public has a
most important concern in our bank
ing system. and it is to governmental
agencies that the public must look for
representation"
$1S,OOO,O 100000 Insured.
Senator Adams said $4,000, ,000,0 900
in deposits now are insured and that
this represents 43 per cent of the total
deposits of l4,214 insured banks.
"The success of the Federal deposit
insurance plan" he emphasized" rests
upon strict and severe supervision and
regulation of banking operations in the
United States. Men who lack capital,
or who are deficient in banking eX-
perience or capacity, or whose integrity
is questionable, must not be permitted
to open, own or operate banks"
The text of Senator Adams address
follows:
There are no banks among the saw
age or the uncivilized. Neither does
the savage or the uncivilized expert
ence panics or depresSionS. Banks
however, are essential to our civili-
cation and it is to be hoped that
depressionS are not inevitable at
tributes. Without banks and the
facilities of credit and exchange
which they afford, business would
be restricted within narrow limits
both in character and area. The
bank is the heart of modern COM
merce. It is the organ which keeps the
lifeblood of business and commerce
IN circulation. The extent to which
banks are a necessity in modern buSi-
ness affairs was made manifest to all
In 1888.
If a bank is to render service and to
fulfill its proper and necessary func-
tionS it must, Of course, be sound
There is nothing more detrimental to
a community than an unsound bank.
The safety Of the funds Of depositor
is the first obligation of bank. While
the capital of a bank with which 1t
operates primarily is contributed by
the stockholders the average bank has
deposits of approximately eight times
its capital. The bank is, therefore,
very largely engaged in handling other
peoples money. Too many are inclined
to rejoice over the misfortunes which
befan bankers, but to those who give
a moments thought to the situation
it is quite apparent that in order that
a bank may be sound, it must also be
prosperous A bank cannot continue
to lose money without impairing the
safety of the funds Of its depositors.
Good Suffer With Bad.
Unfortunately depressions close good
banks as we'll as bad banks. When
fear and panic sweep across the land
and depositors crowd the windows of
banks to withdraw their deposits
banks both good and bad are forced
to call loans and market securities
in order to provide the funds for pay
ment to the depositors. 1t is inev1ta-
BILE that in times Of panic the market
for securities is low, consequently the
sales of such securities in order to
meet the demands of depoSitors are
made at prices below real values, and
in many instances the result has been
not only loss to the Stockholder but
to the depositor. That many solvent
banks were forced to close during the
acute period of the depression is evi-
denced by the fact that Of the 1,4l7
national banks which failed to reopen
after the bank holiday in March, 1888,
more than one-third have paid all OF
their depositors in full.
1t is eminently proper that there
should be an increased recognition OF
the public interest and concern in the
establishment and management OF
banks. Experience has made it very
clear that there should be very
exacting public regulation and control
of banks and banking functions. 1t
was in recognition of these facts that
the banking acts of 1888 and OF 1885
were enacted by Congress.
Sound Banking Restored.
We now have banking system COM
posed of sound banks-the survivors
of the bank panic and of the era
of bad banking. Approximately H.
600 banks have failed and gone out
of existence, bringing financial dis
asters to their depoSitors and stock
holders. The purpose and the effect
of the banking acts of 1888 and OF
1885 was the establishment of sound
banking in our country and the resto-
ration and maintenance of confidence
in the banks on the part of the public.
1t was recognized that there could
be no business recovery without the
foundation of a sound banking STU
alton. 1t was also recognized that
COIlllO6IlCC 1S CSoC11G1dl " oc&AC
and prosperous banking, but that it
can only be kept when deserved.
The most important change in the
banking statutes made by the bank
ing acts of 1888 and Of 1885 was the
ms tuition of a system of Federal de-
post insurance. This system now in
cludes practically all Of the banks in
the United States both State and ma
tional. Under its provisions the de-
post of each individual depositor is
insured up to $5,000 Fifty-one million
individual accounts in the banks Of
the country are now insured in full.
These accounts comprise 98.5 per cent
in number of all of the depositors in
the banks. The aggregate amount of
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