Evening star., 1927-04-24
McFADDEN ACT GIVES NATIONAL
BANKS SAVINGS BUSINESS OK.
Not Sanctioned by Banking Act, But Taken
Into Consideration by Recent Law,
Mckee Points Out.

tional bank with its own funds or
those of it's depositors.
In exercising the powers granted
by the fifteenth section and other
sections Of the McFadden bill relat-
ing to loans and investments ma
tional banks should proceed cautious"
ly. avoiding the encoura cement of
speculation and mindful always that
credit has the same effect upon prices
as token money. 1t is not difficult to
bring about imitation with consequent
high prices, but it is difficult to cor
rect that condition after it has been
created.
IF the national banks will eXer.
else their newly acquired powers
within the limits Of well established.
sound economic principles they viii
he able to render in the future
larger measure of service to their
customers than they have been per
mitted to give in the past. but they
must proceed with the thought in
mind that the wise use OF power
brings success and prosperity, but
the abuse of power creates a csndi-
tion that reacts unfavorably upon
him who uses it unwisely."
4 Timely Lesson.
Mr.. Mckee seems to never talk ex-
cept when he has something worth
while to say, and he is also reputed
to have habit Of saying his say
at a timely time.
Just at present the printing presses
| are working night and day turning
out bonds-thc market is just right.
| every one seems to have money and
there never was a time when so many
people and companies were so willing
and onus of their various ENTERPRISES
and businesses over to the dear public
IN consideration Of cash, while at the
same time they retain control. draw
fat salaries and manage affairs as best
they can for the investors whose
money they have in hand.
None of this comment need be
taken to heart by legitimate bond
dealers or by the legitimate cornora-
tons, Of whom there are many whose
pond issues at once command the
highest respect and are salable to
bankers and large lenders Of money,
IKE the life insurance companies and
investment corporations
When a bank buys a bond issne
under the McFadden law and the
forthcoming regulations of the con.
| troller of the currency. it is safe tn
give the bank credit with knowing an
there is to know about the issue. The
bank must buy all Of the issue. but
may sell part of it to customers.
guaranteeing nayment on maturity or
otherwise.
In the event of a guaranty of the
notes or bonds as sold, the cost still
remains charged to the real estate
loans Of the bank, but if sold without
guaranty have no bearing on the
loan account.
The MeFadden Act.
Gradually bankers and others are
coming to realize that the McFadden
act is very great piece OF financial
legislation. 1t would be that for
nothing else but the extension, in per.
petuity Of the Federal Reserve law
and making the charters Of member
banks perpetual.
In the last few years the Reserve law
has been growing In favor, right and
left. and it is doubtful today. If there
are more than corporaIs guard Of
bankers in the entire country who
favor It's repeal
The Friday statement of the system
shows that the assets Of the Reserve
banks are only partially working
are not being used at all freely by
member banks.
This is an. unmistakable evidence
/ that the banks of the country are
very strong, that money is in album
dant supply-but the fact remains that
the millions Of the Federal Reserve
system are carefully guarded and
available instantly, If the situation
demanded,
Everyone now seemsfsatisfied with
the regional branches and the location
of the regional cities.
Both the Reserve system and the
McFadden law are worthy of deep
consideration.