Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-07-06

it has served tc
weaken public confidence
! When the depression struck and i'm
! paired the purchasing power of this
great market-the greatest in the
world-the effects could not fail tC
spread all over where there are people
manufacturing goods for our conSump-
| ton. Our diminished imports acted
| unfavorably on them and contributed
| 10 fall in prices, resulting in con-
oition of distress in many Of these
| countries. more acute than in the
United States, where diversification OF
industry has tended to modify the eX-
IRENE swings of business"
Prospects for Recovery.
On this subject Mr.. Roberts recalls
that time and again there has been
trouble in this country of a serious
character; that there have been panics
in the security markets, unemployment
and business disasters. and that from
each OF these periods of distress there
was certain, sure recovery, so much 50
that while they may be recalled they
are virtually forgotten"
The Guaranty Survey. published by
the trust company bearing the same
title, discusses the Possible Recovery in
Autumn"
Business has settled down to expect
dull Summer. Between the lSt of
June and the 1st of September sea-
sonable influences do not favor trade
revival. Therefore it is reasonable to
assume that the Autumn stimulus will
provide the next opportunity for an
upturn.'
In an address before the District
Bankers Convention at Hot Springs in
1923. when conditions closely resembled
todayS situation in business, the late
Chauncey DepeW said Nothing is
going to happen to this country. 1t is
the best in the world, strong financially
and every other way, and We should do
everything that we can to aid other
nations without sacrificing any Of our
strength in any way"
In view of the actual situation, it
would seem the part of wisdom not to
try to force recovery to further the OPP
portunity for the bears to work the
market by selling on the bulges, but to
go slow, hold on if possible and to
strengthen ones position to be in read
mess to take advantage of the turn
when it does come.
Want Larger Cut in Profits.
The Federal Reserve System was not
organized as a proflt-maker. Member
banks, all operating under the ma
tional bank act, contributed the needed
cash to furnish the capital for the IL
regional banks. The law provides that
they should purchase stock in the re-
gionals up to 6 per cent of their cap
ltal and surplus, but so far only 3 per
cent of the allotted sum has been called
for payment. On this the contributing
banks receive interest at the rate of 6
per cent. They are also ordered to
carry with their regionals 10 per cent
of their demand deposits and per cent
OF their savings, on which they are not
In receipt of any income. These
amounts are the legal reserve--a source
of dissatisfaction on the part of ma
tional banks and probably a reason
why some banks give up their charters
All IL of the regionals are big money
makers According to the provisions
of the law each regional bank
shall set aside 10 per cent of its profits
annually to surplus account and in adj
dition all other profits shall revert
to the bank until a fund Of 100 per
cent of its capital and surplus shall
have been accumulated. Thereafter 10
per cent OF the net profits shall accrue
to surplus and then all profits shall go
to the Government as franchise tax
Six OF the regionas have completed
the accumulation of profits. Chicago
richmond, Atlanta, Kansas City, Dallas
Minneapolis and ST. Louis. and it will
be but short time before the other six
will join the list.
Member banks have watched these
gathering gains with longing eyes. Hav-
ing furnished the capital and the large
reserve on which they have not been
| paid a cent of profit, they see no reason
why the Government should hog it all
| and are seeking for a way to get it.
Already the Government has received
SO far STAT, 100000 in franchise taxes
| and is sure to be paid many hundreds
OF millions more, although the gains of
the regionals will fall off this year.
Many banks have refused to Join the
| reserve system because of tbs fact that
| the banks are not allowed any interest
on their reserves. Under the national
| bank act 1t was possible for banks to
| carry their reserves in banks in reserve
cities and to draw interest th7reon.
Fletcher Bill. .
! The Fletcher measure, introduced by
| the Senator from Florida, provides that
after present dividends and the compile
| ton of the surplus reserves, profits
should then be distributed to the stock
owning banks.
officials of the Richmond regional
have computed probable payment, pro-
NVidsd the distribution is ordered, sos
per cent for the Richmond bank, per
cent for the Atlanta, $50 FER cent for