Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-08-03

same privileges.
On the is27-1s2o bulge in stocks
there was great demand from many
interests to curtail brokers loans, as
q means Of restricting stock specula-
ton.
Then when the smash came in the
Fall, there was some talk about apply
Ing the breaks to short sellers, although
just how this was to be Accomplished
was not indicated at the time-unleSs
by law.
Senator Glass Measure.
Senator Glass of Virginia heads the
committee named by the Senate to
delye into the activities of the national
bank and Federal Reserve systems.
From the width and scope of the
Glass bill there promises to be banking
debate and hearings during the session
even to the prevention of action until
the first session of the next Congress.
Bankers associations all over the
country, State and national, will want
to be heard on every proposition, while
many individuals will also have their
say, also.
Equality. in so far as privileged
banking is concerned, between State
and national banks is said to be gen.
orally favored Chain banking will
have hard time in the hands of this
committee and on the floor Of both
houses Of Congress, and Is not gen.
orally favored by bankers.
Group banking, as advocated by the
present controller of the currency, is
also likely to be taboo
Branch banking, bitterly fought by
some local bankers when first intro
duced here. is said to be favored by
Senator Glass, restricted only by the
borders Of State.
Interest Rates,
Because there are number of States
that limit by law the legal rate of in
terest that banks may charge to per
cent, for the reason that in credit
emergencies, with the reserve rate
climbing it Is impossible for banks in
the State referred to to rediscount their
eligible paper with profit, it is proposed
that member banks may charge State
limits, or per cent above the Federal
Reserve rate.
Senator Glass holds that brokers
loans, the butt of much criticism, might
have been controlled by the provision
of the national banking act, restricting
loans to any one person to 10 per cent
of the capital and uninpaired surplus
of the bank, although it Is admitted
that this provision does not apply to
all loans.
Would Apply to Affiliated Banks.
It Is proposed to make affiliates of
national banks restrict loans to any one
person or interest to 10 per cent of the
paid in and unimpaired capital and 10
per cent of its unimpaired surplus.
Under the proposed law affiliateS of ma
tional banks would be required to make
reports to the controller OF the cur
rency, as done by members.
Bankers have long contended against
the idea that the Federal Reserve sys-
tenn was organized and put in motion
as Inoneymaker, either for itself or
for the Government, although it is a
fact that they are nearly all big money
makers. The banks that are members
Of the system furnished the capital for
the Reserve banks and on this they re-
ceive per cent annual interest, but
they do not receive anything on the
hundreds Of millions of reserves that
they are forced to carry with their
regional institution.
It is proposed to continue to build
up the surplus of the regional banks
with rs per cent of all earnings, to
fatten the regionals until they acquire
100 per cent of capital as surplus.
Then this, too would go to the Govern
ment as franchise tax, but so per cent
of the profits would be distributed to
the member banks as dividends.
Elimination of the Secretary Of the
Treasury from the Reserve Board Is
suggested.
remedies applied. tt Is not improbable
that action will be lons delayed and