The Wheeling intelligencer. [volume] (Wheeling, W. Va.) 1903-1961, 1922-03-18
Small Banks
Hard Hit By
Bonus Bill.
BY DAVID LAWRENCE
Copyright by The IutGlllgeucer)

WaShngtoC. March 1T.-Small town
e;,d country banks Will h" Hic hardest
= The lo-irHy bonus plan ever goes ir-
% effect n the opinion OF h!Eh officials
% chc treasury department.. They be-
,:Gve that the city hanks. which ordt.i-
+rilv do NOT make small loans or even
'a>o small deposits vii; not bother with
ne requests that the adjusted compen-
sat.oG certificates b" exchanged Coz
cash. The large banks also arc n u
strong position 70 refuse because there
- no legal ccmpuls!on upon them 10
aonor the certificates
The small banks. 'hope,er. vii, rot
We able as readily TO decline 10 lend
money because. il small communities,
;Gc relation between the would-bc bor-
-owec and the banks Is bound 10 &c 50
intimate that Il refusal might prove en-
1ar=aSSiHG. This means that :h'2 COuE-
,ry banks Will have 10 dig down into
;helr capital and reserves 20 meet the
.aans and while they can appeal !" lar
ger banks 10 help them ou;. this process
5 by no means 4 safe one - count upon.
\ provision has been inserted IN the
Tordney bill whereby the banks can ~
discount the certificates az aCy bank
except federal reserve banks.
The Disadvantages
'7asnuch as Chairman E'ordGe- has
':stad tho advantages OF the new meas
~ro which nc has drawn, treasury oSi-
r!a's are listing the disadvantages Of
:ho bill IN the form presented. Thes"
disadvantages arc:
First. tho country banks aad ,he
banks IN agricultural districts which
are already strainiuS TO the utmost to
uCot the demands OF loans by farmers
and are already Overloaded with loans
tttff--ttnd-i hard TO get the money to
cash the certificates OF the service rnen.
Second, tho country banks which q"
havc the money Will have that much
less 10 lend for productive purposes.
Third. the Increase OF at least S5h0.-
100000 In credits is an Initiation which
might be justified IL the money were 10
5a employed IN financing and manutac-
turing or other productive enterprises
hut will prove mere expansion o;
credit from an economic viewpoint.
Fourth, the whole transaction !s az
indirect government credit and weak
ms the governments position by about
four billions OF dollars, for Chairman
Fordney now admits that the burden
by 1913 will amount 10 that much. An
addition OF more than four billions 70 p
wa debf OF twG2ty three billions -
.ihc;y 20 dcp-cs3 :he value os govern
merit securities as whole.
Those who Default
Tti;h. the rordney p.aH does -,
;7'tc :7;o account the number % Ten
who may default on their borrowings.
rnde- the system proposed man who
hor5ows one half the total amount oc
vs. certificate viii get tho remainder C.
.He value os his certificate IL thres
ears. In other words. the TREASURY
department automatically will have 10
-odccm the certificates held o. the
banks and also viii bc required NJ oncr
o pay the service man ne remaining
cun, due.
This means that q gcc cash qrickiy,
.hc deEaultt0G process will BE- -esor;Hd
m. e will not be like GeFaGlc!1g on al
culinary loan but WI: merely mean
..a=iGuS IN advance q specified sum de-
pending upon the number Of days Z
solder or sailor served n the war.
While Il Is true that those who DO not
default will get slightly Increased
amount n 124c whrr the certificates
HraUy become due. treasury officials
expect that IT." majority OF the service
r"r viii prefer 10 cash their certificate,
p no banks while the banks n turn
u.,l look TO :he treasury 70 redeem
;nem w.thia three years.
There's tho whole criticism n a nut
sheil-the treasury considers the Ford
acy plan 10 h.: disadvantaEcous 10 the
banks during the next tIvce years and
then imposes a heavy burden AFTER that
on the government itself. Instead o;
FOUR billions oc dollars in twenty years
me experts estimate that a large part
% that amount wIl, be added 10 the pub
.!c debt In the next three years 20 meet
the certificates that will be presented
by the banks 20 ;he government for re-
redemption. n that ry|nt the .reasury
believes an Increased taxation Will be
No "sly way out.