Mr. Farmer: I want to read the letter of the Comptroller to you men.
Treasury Department,
Washington, January 25, 1913.
Mr. Joshua Farmer,
Loraine, New York.Dear Sir: Your letter of January 22d is received and in compliance with your request I take pleasure in furnishing you the following information with respect to aggregate deposits of active National banks and the liability of insolvent National banks:
The annual deposits for forty-nine years in active National banks average $2,555,700,000. The losses sustained by creditors of failed National banks (actual for closed receivership and estimated for those not closed) will approximate $44,100,000, or an annual average loss of $900,000. The average annual loss is, therefore, 0.0352 per cent of the annual average deposits in active banks.
Of the 525 National banks placed in the charge of receivers, the affairs of 478 have been finally closed and the losses to creditors definitely determined.
The liabilities of 478 insolvent National banks the affairs of which have been finally closed
amounted to$219,357,100 Creditors received in dividends, offsets, etc. 181,215,826 —————— Loss to creditors $38,141,274 Creditors, therefore, received an average of 82.50 per cent, the loss averaging 17.41 per cent.
There are now (September 30, 1912) 47 insolvent
banks in process of liquidation by receivers, with liabilities of$34,314,633 Creditors have received (September 30, 1912) 26,750,925 ————— Balance due creditors $7,563,708 Creditors of these 47 insolvent banks have, therefore, received an average of 77.9 per cent. For these receiverships it can safely be estimated that the loss to creditors will be no greater than in those banks already closed, namely, 17.4 per cent.
During the past ten years 119 National banks have been placed in the charge of receivers. The affairs of 78 of these banks have been finally closed and 41 are yet in the charge of receivers. The liabilities of these 119 banks, as shown by the enclosed statement, aggregate $66,804,214. Creditors have received $56,252,544, or 84.20 per cent. If creditors were, therefore, paid no further dividends, the loss during the ten years mentioned would average only about 15.80 per cent. It cannot at this time be determined what the ultimate loss will be to creditors of the 41 insolvent banks which failed since 1902.
Yours very truly,
W.J. Fowler,
Deputy Comptroller.
| The liabilities of 478 insolvent National banks
the affairs of which have been finally closed amounted to | $219,357,100 |
| Creditors received in dividends, offsets, etc. | 181,215,826 |
| —————— | |
| Loss to creditors | $38,141,274 |
| There are now (September 30, 1912) 47 insolvent banks in process of liquidation by receivers, with liabilities of | $34,314,633 |
| Creditors have received (September 30, 1912) | 26,750,925 |
| ————— | |
| Balance due creditors | $7,563,708 |
Mr. Lawyer: Well, here goes another complete knock-out for me, I am plumb out, over the ropes this time. I don't know that I can ever recover from that blow.
Mr. Banker: Just a moment, gentlemen, while I admit that you have won your fight for the depositors, you must remember that although you have an insurance that will cover net losses after you have cleaned up the failures and closed out the assets, you will still have quite a problem to solve to meet the demands of the depositors when the failure takes place.
Mr. Laboringman: If the depositors in the National banks had been insured in some way during the past forty-nine years, I do not believe that we would have had one failure in ten that we have had, and if you will now protect the banks, as Mr. Banker proposes, through his supervision by a board of control, I do not believe that we will ever have another; then why not give our 20,000,000 depositors the benefit of it, as it will cost nothing and will absolutely prevent runs on your banks.
Mr. Merchant: Yes, and also stop the hoarding of money, which is a curse to any country where it takes place. I am not sure, gentlemen, but what the adoption of this principle of deposit insurance will do more to guarantee steady conditions than any other one thing.
Mr. Banker: Well, while the problem has its difficulties, I really think it is up to us to work it out in some way.