Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-10
Commissions Report Intend
ed to Place Curb on Bank
Failures in Future.
DRASTIC LEGISLATION
CALLED UNNECESSARY
Saturday Prices Firm on Local Elk
change-0ther Comment in
Financial District.
BY EDWARD C. STONE.


Five major banking subjects are dealt
with in the report of the Economic
Policy Commission of the American
Bankers Associa ion, copies of which
reached Washington yesterday, these
problers being the 1930-31 bank fall
ure episode, meeting the bank failure
situation, developments in branch
group and chain banking, revolutionary
proposals aimed at banking, and spe-
cific recommendations. The report was
presented at the recent council meet
ing in Augusta, Ga, and aroused tre-
nEendous interest.
Chairman r. S. Hecht says that the
Nation Is now in the bottom OF Wnat
we hope may be the first stages OF
new business cycle. Sooner or later a
new period of expansion and prosperity
will develop. I'VE have before us" he
saws. the fresh lessons of the mistakes
and .rnismanagement that brought the
last period Of prosperity to an END In
one of the greatest economic disasters
in the ccuntrys history. -,
Banking cannot adopt pharisaical
attitude and say we did not sin, as
other lines of business did, against
sound economic principles. Banking
also made its mistakes. Although we
are thus willing to confess the error
of banking, we do not believe that their
measures, or for any revolutionary
changes in banking practice" The re-
port then presents these eight spe-
cific suggestions for practical reforms
through better bank management:
Eight Vital Suggestions.
Cd Liquidation or consolidation of
banks where changed local economic
conditions render this desirable;
az Wider affiliation among State
banks with the Federal Reserve Sys~
tenn:
80 Development of limited branch
banking where economic conditions and
legal authority make this expedient;
"a A more general practice, espe-
cially lacking among country banks, to
anaiyze the cost of carrying accounts
and other operating details and the es-
Enlistment of proper service charges
to make all classes Of functions prof.
liable;
go A more general application Of
the theory and practice OF secondary
reserves;
(8) Avoidance by banks Of undue
borrowing merely to increase their own
profits by relending at higher rates, or
to overexpand credit to local business
in order to increase their own business;
I'd Cooperation among bankers in
local communities through city, county
or regional clearing houses so as to
promote mutually beneficial conditions
and practices;
(S) The insistence upon higher edu-
cational effort and qualifications among
employees, especially those to be trusted
with executive duties.
Legislative Measures Urged.
Some external measures, along mod
crate and supervisory lines, are urged
by the committee TO help strengthen
banking. Among these are:
% The broadening in the States OF
branch banking laws where conditions
warrant an extension of this type OF
banking service to the public:
20 The establishment of sound mimi
mum capital funds under which banks
will be allowed to operate. which should
be materially higher than now prevails
in most States; specifically, We believe
that the minimum capital with which
any new bank shall be chartered,
whether State or National, should be at
least $4,000;
90 The provision Of funds and regu-
lations to keep the official STATS OF all
supervisory departments up TO level OF
ability and integrity that will univerS-
whose activities they are empowered to
review, and will supply real added de-
fenses to the public interests they are
eppointed to protect.
"a In connection with the policies
of bank chartering departments, we
would recommend that, even to a
greater extent than is now the practice,
the greatest care and moderation should
be exercised in granting new charters,
so as to guard against overbanking or
the launching Of new banks by unquall-
fed persons, which have doubtless been
serious factors in the bank failure sit
uation in the past.
80 Also. referring TO Federal Reserve
practice not requiring legislation, we b.
lieve that the Federal Reserve banks
should exercise more freely their rights
to examine banks and use their discre-
tionary power 70 refuse rediscount facil-
tiles to banks INDUCING in Objectionable
banking methods.
Trading on Local Exchange.
-Four bank stocks were traded in on
the Washington Stock Exchange yes
terday. One of these was Federal
American Nstiopal Bank g. Trust Co,
which figured in an unusual turnover
In l0-share lots during the week. Dur
ing one session there were 3 such sales
and Yesterday there were six. all at so.
Washington Railway g. Electric IS
led the bond division yesterday. Prices
in both bonds and stocks changed but
little. Yesterdays sales follow:
Capital Traction $500 a BOZ.
District National Bank-l0 at 202.
Federal-American National Bank &:
Trust-l0 at so. 10 at so, 10 at 80, ~
at SO, 10 at so, 10 at so.
Washington Loan g. Trust Co.-l0 al
42O,. 10 at 400, at 425.
Peoples Drug Stores preferr"d-5 at
1ol. at l01.
Washington Railway g. Electric pre-
1erred-50 at 983s 20 a. $3.50.
Capital Traction 5s-Si 900 at 81.
Potomac Electric Consolidated SIS
81 900 at l0A.
WashinstOn. Gas IS "AT<s2OO at
washington Gas IS "B"-$2oO al
1o434.
ATS.
washington Railway g. Electric As
$4,000 at 89%, 1000 at s934.
Bank Presidents Pay Tribute.
Seven Washington bank president:
we're among those who paid last
tribute TO I. A. Fleming at the funera
services held here Friday before the
body was taken to Chicago for inter.
nent Yesterday The heads Of the loca
institutions included George w. White
president OF the National Metropolitan
y. q. Addison, Security Savings q Com.