TABLE 13.-Failed State banks tabulated by States, showing number and resources grouped according to magnitude of resources 1 No data on State bank failures in Connecticut were obtainable. No State banks have failed in Delaware during the period 1900 to 1926. 84285-268 Results obtained in the liquidation of 167 national banks that failed during the period January 1, 1900, to July 1, 1925 Alabama Arizona Florida. 95. 29 Idaho. Illinois. 93. 79 Indiana Iowa... 90. 74 Kansas 95. 58 37.38 21. 61 Ohio. Oklahoma.. Percentages for 35. 71 36. 92 18. 69 8. 69 100. 01 44. 14 17. 64 28. 30 9. 92100 86. 08 13.92 100 46. 41 35. 38 9.39 8. 81 99.99 94. 20, 5. 80 55. 59 23. 64 14. 59 6. 18 100 95. 15 4.85 43. 39 22. 59 14. 82 19. 20 100 95.30 4. 70 23.06 11. 07:39. 35 26. 52 100 70. 35 29. 65 50. 86 27. 01 16. 11 6. 02 100 91. 47, 8. 53 36. 60 19. 75 29. 16 14. 49 100 76. 78 23. 22 35. 37 32. 41 17. 91 14. 31 100 94. 62 5.38 46. 41 14. 31 9.48 29. 79 99. 99 81. 73 18. 27 37. 76 21. 83 30. 32 10. 09 100 85. 59 14. 41 43. 01 33. 88 12. 95 10. 16 100 92. 91 7.09 100 22. 41 69. 85 6. 13 1. 46 .15 100 Doctor WILLIS. The showing made there in general is that our bank with double liability of stockholders is of very little value, and that while in the aggregate, taking the whole 25 years, depositors have not lost very seriously in the long run, the stockholders have lost tremendously, while the bank failures since 1920 have been of a peculiarly aggravated type with extremely high ratios of losses. All that can be better seen from the table and I will not pause further with that. Now, so much by way of a purely general and very hasty survey of the bank failures situation. I have outlined it only in a very few of these major districts, and have not attempted to go into details, or attempting to relate bank failures to State conditions, but of course the question that suggests itself to everyone's mind I think is what are the causes of these bank failures, and how are we going to check them? The first cause, it seems to me, is the hasty, careless and political granting of bank charters, and in order to test that carefully something could be done by way of a more statistical survey and interviews with competent bank authorities in practically every one of these States, and more particularly with banking institutions in the several states. There is a general consensus of opinion that the chartering of banks needs to be very much more carefully safeguarded, and if the small banks are to go on being organized on the principle that they now are, there should be a vastly more careful inquiry into the people who are operating them after they are started as well as into the resources of the people who initiate them. H. R. 2 seems to me to be a bill, just as this one, to conserve the existing small banking situation in the country. If that situation is to be conserved it undoubtedly ought to be relieved of its defects, and Congress, it seems to me, should do what it can to endeavor to curb them. The cause of bank failures is the fact that our banks are unsatisfactorily and inadequately examined. I have no doubt that the superintendents of the banks are for the most part careful, capable and well-intentioned, and in many cases high-minded men who are doing the best they can with very limited resources at their disposal. But whatever the reason may be it is a fact that they are not getting the results, and that the examination of small banks throughout the country, and especially since the great multiplication in number, has been inadequate. And now in the third place--and this has a rather important bearing upon H. R. 2-the Federal reserve system, by which I mean the management of the Federal reserve banks, is greatly at fault in the matter of these bank failures. It was in the beginning said by some unwise advocate of the Federal reserve system that it would absolutely end bank failures; it was an absolute simon-pure remedy for bank failures, now, as a matter of fact, as I have just said, we have had more bank failures and more bank failed assets under the Federal reserve system than we ever had before, and the question may properly be raised as to whether that is in any way related to the Federal reserve system as such. The reserve system was based on a very careful analysis of discount commercial paper, each paper standing on its own feet and being estimated on the basis of its own merit. Instead of that it is becoming the practice of our Federal reserve banks in the Midwest, Southwest, and Northwest to lend heavily upon collateral, and to take collateral for the protection of paper which is technically eligible but about which they are entirely uncertain as to its quality. That is not a matter of conjecture, because it has been testified to before a Congressional committee, especially by Gov. J. Z. Miller, of the Federal Reserve Bank of Kansas City. Mr. Miller at that time had little to say on the subject, and he has explained his position on page 739 and following of the agricultural inquiry under Senate Concurrent Resolution No. 4, published in 1922, volume 3. In addition to that we have the further fact that pretty nearly all the investigators who have looked through the situation in recent years have come to the conclusion that there is an erroneous credit policy existing so that in my opinion it is regretably true that the |