Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-03
BANK ASSETS SHOW
SHARP SHR|NKAGE
.'r7uiry Into Affairs of New
York institution Reveals
Heavy Borrowings.
BY JOHN F. SINCLAIR.


NEW YORK, February 3.-The 400,-
900 depositors of the Bank of United
States spent most of yesterday adding
and subtracting in an effort to learn
what percentage of their deposits would
finallN be paid to them. Supt Brod-
erick's report was a sorry picture OF
city banking at its worst.
On December IL, the day the bank
closed, the assets were estimated as
worth few thousand dollars less than
$3.50, 1000, 900. Supt. Broderick's check
ings reveal that the total liquidation
value will not exceed $168,000,000,
shrinkage of $69, 100000
Seventeen of the 81 directors bor-
rowed personally, or were indorserS on
paper of sum totaling $5,140,000.
Much of the money loaned to their
friends was, and even the collateral
loans we're, poorly secured In many
cases.
Take the case of one we'll known
New Yorker. who has since committed
suicide He borrowed $4,000 with less
than $4,000 worth of collateral. An
other we'll known New Yorker Dor
rowed I$se5,oOO against collateral worth
The "a affiliated companies borrowed
$24,381 900.
Of course. stockholders, who owned
the S47,800,000 of capital funds Of the
bank, are cleaned out absolutely. And
a double liability on their stock faces
them! Depositors will get so to 10
cents on the dollar. depending on how
successfully the liquidation is handed.
But how any bank could get into
against the State banking authorities
is mystery to any one at all familiar
with banking practice.
The State investigation from now on
should be thorough and far-reaching,
for it touches the vital center of any
communitys life-confldence.
Bonus and Bonds.
When he appeared before the House
of Representatives Ways and Means
Committee. Gov Roy A. Young Of the
Boston Federal Reserve Bank estimated
just what the cash bonus bill would
do to Government bonds. And it was
If $4,000 10000 United States
bond issue is f1oated at per cent 1t
would cut off 100000 from the
market value of other United States
Government bonds. If the interest rate
was raised to "A per cent the loss
would total about S675. 100000. while
if Az per cent was necessary to float
the entire issue the market value loss
would be 81 00.000,0 900.
Gov. Young has had as much ex-
perience in this field as any other
American banker. Here's the way Gov.
Young sizes up the cash payment:
I'VE will try to borrow $3,500,000,00o
from ourselves, to give ourselves, to
spend for ourselves and at some time
to pay back ourselves. 1t appears TO
me that this is a deliberate dehation
on a vast scale and the aftermath is
bound to come"
But the American Legion, through
its Executive Committee, which repre-
sents 10 per cent of the voters of the
Nation, has declared for the cash
bonus. That makes it political, even
mere than financial, question-at
least for many Representatives and
Senators.
Presidents Position. {.
President Hoover is facing more hard
luck in the cash bonus fight.
Congress is very likely to pass some
sort of legislation regarding the bonus,
not because it is good finance, because
It is not-but because it is good politics.
Many members Of Congress privately
oppose cash payment at this time. But
when it comes to a vote-thats differ"
ent. They will vote the cash bonus.
upon the theory that if it does get
through both Houses the President will
veto the bill and take the chance OF
alternating thousands of votes.
II the President vetoes it two-thirds
vote is needed in both the Senate and
the House to pass it. Can this be ac-
complished?
Some wise observers believe it can,
but this writer believes it cannot and
that while the bill will be strongly
supported in both Houses Of Congress it
will never become law.
War Cost.
Rev. DR.. Harry Emerson Fosdick last
Sunday before the Riverside Church of
New York spoke of the huge armament
expenditures throughput the world as
madness, and declared If the United
States goes on with such insanity long
enough We will have a re-enactment of
the bolshevik revolution in America"
A checking of the United States war
costs, indicated by appropriation bills
pending in Congress, shows that about
81 900. 900, 000-or 40 per cent of the to-
tai expenditures of the Government
go into military expenses. The present
budget figures show the War Depart
ment down for S464, 900 900, the Navy
Department for S349 600, 900 and the
veterans administration for $946, 000,-
600.
And on top Of this the American
Legion demands S3500,000 900 cash
bonus right away! If business is to be
relieved in the future the war" prob
lem and all its affiliates has got to be
seriously tackled by the business men,
and not by the politicians. This Is be-
coming more evident every day.
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