The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1931-10-07
Reinsurance

The federal government has stepped in to pre-
vent national banking crisis. That is the signif1-
of Tuesday nights White House conference and
President Hoovers announcement of a program of
action.
Instead of letting matters drift further, the ad-
ministraton has faced the emergency and moved to
meet it.
The fact alone is one of the most reassurng that
has out of the depression 1t should revive hope
in the discouraged business community
President Hoover has assumed leadership. The
people will not follow him blndly But they will fol-
low any reasonable line of march.
The Presidents program is not complete-and, by
the nature of the case, it not be at the moment
But it does attack the problem at the point of mme-
date emergency That point is the jam of frozen
assets which endangers many banks and blocks the
free flow of normal credit for legitimate business
To break that jam, the President proposes the
cooperation of unembarrassed banks in making adj
vances on securities of closed banks to free part OF
the latters deposits This process is going forward
and will relieve much distress this winter
Moreover, he has arranged for private mobiliza-
ton OF banking to form $5OOO0OOOO insti-
tuition to rediscount frozen assets of banks which
otherwise might be forced to the wall Certainly that
is an important move in the right direction
If that $5OO,OOO,OOO fund is inadequate for the
purpose and if private sources fail to produce sf-
cient amount he apparently intends to bring federal
funds to the rescue. Though he is not specific that
seems to be the purpose of his statement that he
may ask congress to create federal finance cor
poration somewhat similar in character to the war
finance corporation. Here again, Hoover is on a
sound course
His proposal for broadening the eligibility pro-
visions of the federal act doubtless is neces-
sary to make the assets of banks more liquid
Obviously, however, this is two-edged weapon
Unless it is used with discretion can weaken more
than strengthen the fundamental financial structure
of the country.
The test will be i'll the detailed provisions of the
law. Hoovers intimation that the congressional
banking committees will be allowed sufficient time to
consider this matter is fair enough
Since banks in agricultural communities suffered
first and perhaps have suffered most, his proposal
that congress increase the capitalization of federal
land banks is timely and reasonable
For some reason the President did not make his
expected declaration for extension of the one
year debt and reparation holiday to three years
There is little doubt, however that he will be forced
by events to that position-n not to outright can
collation..
Unfortunately, the value of such moratorium ex-
tension or cancellation will not be great 1t is post
poned too long.
gram as announced Tuesday night is adequate in it
self. We believe the remedy must go beyond an i'm
provement in the technical banking situation i'm
portant that is
We believe that the government among other
things, must initiate a national planning system
such as proposed from different angles by Mr. Swope
of General Electric and by Senator La Follette-to
facilitate cooperation of industries as the President
now is insisting the cooperation of banks
And we believe that the government itself must
stimulate buying and provide more jobs by public
works than under way.
All of that involves recognition by the admin
istration that it is the duty of the government to
take leadership in this peace emergency as it
assumed power and direction during the war
emergency.
That the President has taken the first step in that
leadership should be occasion for national
satisfaction