Evening star., 1945-01-30

IN OppOSiIIou w y,w.ll MelI.tt
measures de-
signed to improve our banking sys-
tenn, only to admit their error when
time revealed that Congress had
more wisdom on the subject than
the bankers.
Yet in the hearings last week,
Senators listened with open-mouthed
awe to Jesse Jones as he said the
things that bankers always have
said on the subject Of Government
credit. 1t was Jesse Jones the
banker, not Jesse Jones the public
servant, who seemed to hold them
entranced.
Very timely in this connection is
the annual report of the Federal De-
posit Insurance Corp, out this
month. 1t reviews the first 10 years
operation and tells story of amaz-
ing success. Summed up, the story
is this: With bank deposits now ex-
ceeding ,OOO,OOo,O0O, depositors
have lost less than 100000 from
bank failures in the whole 10 years.
And the insurance system has not
cost the taxpayer penny; If abol-
ished today-which nobody would
permit-it would turn over to the
Taxpayers, or the United States
Treasury, profit of many millions.
Money Lost to Wall Street.
The FDIC was not created by the
bankers of America; it did not re-
suit from the type of mentality to
which the Senators now are paying
such tribute. 1t came from the
brains of a Virginia country editor
named Carter Glass and an Ala
bama country lawyer named Henry
Steagall. Two impractical, vision
airy dreamers.
Representative Steagall and Sena-
tor Glass had lived through the
high. wide and handsome finance
of the 2Os. This was the period
in which Andrew w. Mellon, banker
another name that used to fill
Senators with awe-held that the
fantastic speculations of Wall Street
were sound finance, Notwithstanding
the speculations we're involving more
and more of the peoples bank de-
posits. They lived likewise through
the fearful Gays that followed the
collapse. They could read the rec
ord and this is what they read:
In a 10-year period 1929 banks
were placed in receivership or sus-
pended business.
Deposits in these banks amounted
to 5000 100000.
Depositors' losses in those 10 years
we're $1,741 100000. Read those fig
ures out loud-one billion, seven
hundred and forty one million
dollars. Now contrast that sum with
the 100000 lost by depositors in
the past 10 years.
Keep in mind that the bank fail
ures responsible for that staggering
total of depositors' losses were not
all the result of the market collapse.
During three years of Harding
"normalcy" 1913 banks closed. Dur
ing six years of Coolidge prosperity"
Abb banks closed, or almost as many
as in the years of Herbert Hoover's
sound engineering.
Millions Never Saw Run.
Thanks to the starry-eyed idealists
named above, that sort of thing
doesn't happen any more. There are
millions of voters in this country
who never saw run on the bank
They don't know the horror that
gripped the community when the
frightening word went around,
There's run on the Blank Ma
tional." Their parents can tell
them. Their parents remember
the panic that hit them if their
money happened to be in that
bank, or, if not, the acute fear that
the disaster might spread to their
own. They remember banks that
collapsed because of unsound prac-
tees and banks that were wrecked
by false rumors
All that was in another day The
depositors - and the bankers no
longer lie awake at night thanks to
the amateur experimentation" of
Congress in field supposed to be
sacred to bankers.
All of this offers no criticism of
bankers-as bankers. Most of them
know their busineSs-the business of
their own particular bank-and they