People's Pilot, Volume 4, Number 49, Rensselaer, Jasper County, 30 May 1895 — OUR BANKING SYSTEM. [ARTICLE]

OUR BANKING SYSTEM.

PEOPLE ARE DEFRAUDED BY THE PLUTES Only Raaponalble for Twice the A moan t of Their Capital Stock, Bnt That Don't Const —Robbing Schema Shawn Cp“Best banking system In the world.” Over and over again we bear this assertion. Let us see how true it is. Examine the law. A national bank is liable for twice the amount of its capital stock. It is not liable to depositors, nor anybody else, for any more. Thus, if the capital stock of the bank is >50,000, though the deposits are 110,000,000, it is liable for only >IOO,OOO. A small pamphlet lies before us, entitled, “Chicago Bank Reports, July 13, 1894.” Among the reports is that of one of the leading banks, which admits an indebtedness of >35,000,000 —one item of its debt being >13,000,000 to individual depositors. Suppose this bank were to fail and be prosecuted by its creditors. How much do you suppose the law would compel the stockholders to pay of this indebtedness? Let us see.

The capital stock of the bank is >3,000,000. Consequently the liability of the bank, >6,000,000. We substract >6,000,000 from >35,000,000 and we have >29,000,000 left, for which the creditors could never prosecute the stockholders. In other words this one bank can fail and cheat the patrons of the institution out of >29,000,000. No matter how rich may be the stockholders of this bank. After they have paid up an amount equal to twice the amount of their original stock, they are held liable for no more. They may appropriate >100,000,000, yet their liability is only for >6,000,000. Herein lies the danger, the insecurity of our present national bany system. The capital of the bank may be >1,000,000; the deposits may be >10,000,000. Eight millions are unsecured, and the depositors have no indemnity for their money, and no means of getting it. Suppose the government conducted the bank. Every official in the bank who handled its money would be as much under bond for faithful performance of duty as the collector in our townships, or our county treasurers, are to-day. At the present time the people have no security in their banks. If they borrow money, they are required to give ample security, but when they lend their funds to the bank they do so without protection against loss. While the national bank is expected to be a little more secure than the ordinary private bank, it is really insecure beyond twice the amount of its capital stock, and if the stockholders have no property, then the depositors in a national bank get nothing. The people at large know this, and, unless it is imperatively necessary to use a bank, they hide their money. So universally is money hidden as to make it continually scarce, and interest high. The result is, that business is diminished or depressed; people cannot pay their interest; their property passes into the hands of the money lenders, and borrowers become impoverished.

Under government ownership, the depositors in the banks would be absolutely secured against loss; the banks would be filled with money—good people’s money; money would be abundant, and, if loaned upon absolute securities, worth twice what was borrowed, the interest would be low, and prosperity would be universal. Which do the people want, a banking system under which the depositors' money is absolutely safe, or the present system, in which no certainty exists that if the depositor leaves his money in the bank, that he will ever handle it again? Certainty or uncertainty, in the solvency of the bank—money abundant, or money scarce — money in universal circulation at a Jow interest, or money withdrawn from the avenues of business —hidden, scarce—interest high—industries suspended—tramps and idlers abounding? Which do the people want? —Thomas E. Hill, in Chicago Search-Light. The most good that the silver agb tation is doing is demonstrating to the people that neither gold or silver is fit for a currency for a uvilized people