Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-10-24
New Banking Law Urged
Savings Deposit Accounts Held
Liabilities to National Banks.


To the Editor OF The Star:
When the special session Of Congress
was convened to revise the tariff
already 20 per cent too high-and
wasting IL months at the job, tho
writer pointed out that that was not
the cause Of the business depression,
since the exports to foreign countries
greatly exceeded imports resulting in
the United States accommodating nearly
half the gold of the world, but that the
cause was an Ubiquitous banking and
idge administration, which its author
and drafter recently denounced as "a
relic Of a bygone generation and no
longer adapted to our present-day bust
ness needs" which puts q premium on
savings deposit accounts by allowing
banks to offer alluring rates Of interest
for the 62-cent dollar To add to that,
aided by the INSTRUMENTATION of the
Federal Reserve act, economy was
preached day in and day out, with the
result that there are now nearly ST.
100000 savings accounts in the United
States before the World War there
were only 8,000,000) with total savings
amounting to nearly $4,000 900 900 at
rates of interest averaging nearly AZ
per cent.
All recent financial reports, despite
the business depression, show that these
accounts are daily increasing In New
York alone they reached nearly $780,
600, 900 last year. As a result of these
savings there Is now nearly $500, 000, 900
less cash in circulation than year ago.
Every dollar put in these accounts
makes conditions so much worse, since
the misguided banker Is not lending the
money to speculative business men be-
cause the purchasing power of the dol
lar is not worth the interest demanded
Even at 2 per cent interest business Is
not borrowing from the large financial
institutions of the country, which are
loaded with dollars because production
cannot be consumed, due to the fact
that millions of men are out of en-
ployment and their purchasing power
has been broken down AS a result of
this condition these big financial insti-
buttons jumped at the recent offer of
the Treasury Department to pay 2sk
per cent interest on Treasury certifi-
Gates, the lowest rate offered since the
Civil War, and 1t was more than four
times oversubscribed Recently the
writer asked this question: If In 1896
the year of the mythical gold standard
on which the world is supposed to be
doing business, when, as a matter of
TACT, 1t Is doing business on bankers
credit-and up to the entrance of the
United States into the World War one
could have borrowed q dollar which had
more than double the purchasing power
OF the present 62-cent dollar for AZ
per cent interest, how much interest
should he be compelled to pay for the
present 62-cent dollar and why?
The Treasury Department officially
answers the question by allowing 2ss
per cent interest on its recent issue of
treasury certificates for the deprecated
dollar-all that it is worth.
There is no unemployment in France
today, which is the most prosperous
country In the world. In fact latest
reports show that $4,000 more men are
needed. The interest rate there is 2. per
cent, and naturally money and credit
Is freely circulated, resulting in ample
employment for its people, as well as
the gold OF the world flowing to it in
return for its products. Nevertheless,
Inc United States holds mole than twice
the amount Of gold held by France, the
latest figures of the Federal Reserve
Board showing that France holds 1920
per cent while the United States holds
S9.l7 per cent, the remaining As per
cent being distributed among the other
countries OF the world, totally disprp-
porttonate percentage.
Despite its large gold holdiags, there
is an abnormal business depression in
the United States, wholly uncaIed for,
which requires major operation to
cut out the cancer which caused the
business world to become SICK. In the
writer's opinion, it will require
around $4,000, 100000 of money and
credit to start the wheels OF
industry revolving on a healthy
and permanent basis - Just one
half the amount Of credit debated by
the ton of the Federal
Reserve Board in the recent Wall Street
crash. And since the world is burdened
with intereSt-rather, usury-which it
is unable to pay, it would be folly to
ssk 1t further to burden itself. AS a
Gay out Of the dilemma, suggest the
enactment by Congress of the 25-year,
non-intereSt-bearing bond bill, now
pending in the Ways and Means Com
mittee of the House of Representatives,
permitting States, cities and counties,
when giving proper security, to deposit
their bonds with the Secretary of the
Treasury and receive legal tender money
to start needed public Improvements
which would absorb unemployment and
increase the purchasing power of the
country until conditions became normal,
when, by Executive order, it would be
automatically stopped
Then Congress should pass a new
banking and currency law prohibiting
national banks and trust companies
from opening savings deposit accounts.
These accounts, since they are bought,
are real liability rather than an asset
to the banks. Such accounts would
then seek the Government postal saw
ings banks, which pay per cent in
terest, or the savings banks and build
ing and loan associations for invest
ment and when properly invested would
yield a greater return in dividends than
the banks now pay in interest on such
deposits.
However, since the world Is supposed
TO be doing business on che mythical
gold standard, and since the increase
in the production of new gold through
out the world is rapidly diminishing
/ and is insufficient to keep pace with the
growing business of the world, it is
palpably evident that the issue of 1896
the bimetallic or cumulative theory
of money-will have to be fought again,
not as a political question, but as an
economic question, through interna-
tional agreement. Since the United
States holds nearly half the gold of
the world, that question is not as acute
here as in the rest of the world But
such condition materially affects the
sale of the surplus products of the
United States to foreign countries, be-
cause of the scarcity of gold in those
countries, on which, to some extent,
dependS the internal nroSneritv of the