Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-19
PROBE OF BANKING
Z WILL START TODAY
Glass Subcommittee Author
lied to Make Thorough
Investigation.
BY JOHN F. SINCLAIR.
dispatch to The Star.

United States Senate start their long
heralded money and banking lnVestlga-
ton today, when Eugene Meyer, jr., gov
ernor of the Federal Reserve Board
and John w. Pole, controller OF the cur
rency, appear as the first witnesses.
The first effort of the committee
probably will be to find out why 1,OOO
banks in the United States, with de-
posts exceeding $700 900 900, failed last
year. Some think, too, that the New
York Stock Exchange will be given the
"once-over," for the committee has
the power to do 1t.
This subcommittee has been au-
thorized to inquire into the national
banking system, their facilities for
trading and carrying speculative securi-
ties: the extent of call loans to brokers
by member banks for such purpose; the
effect on the systems of the formation
of investment and security trust; the
desirability of chain banking as part
of the national system, together With
any related problems which the COM
mittee may think it important to in
VeStigate."
PujO Investigation Recalled.
Related problems!" There's enough
power in the resolution to investigate
every line of business that borrowS or
lends money. 1t is as sweeping as the
resolution which resulted in the famous
Pujo Money Trust investigation OF 70
years ago. What stir that one caused
Throughout the United States! The
creation of the Federal Reserve System
really resulted from that investigation.
Tomorrow New York will have its day,
with Gov. George l.. Harrison ana
Chairman j. H. Case. OF the Board OF
the Federal Reserve Bank, testifying.
How far the investigation will reach
has not been indicated but Senator
Glass, former Secretary of the Treas
ury, is known as the Senate's ablest
student of banking and currency. Wall
Street, as well as the rest of the coun-
try. therefore, will follow its work with
intense interest.
For there's plenty of loose dynamite
lying around.
Pamphlet on Silver.
DR.. Rene Leon. economist for Lang
lev g. Co., New York, investment bank
eFs, is known in the inner circle as a
"silver" expert-one of the ablest in
the United States.
In an admirable pamphlet, which he
has just issued entitled Silver: Sig
nificance of It's Rise and Fall" he
attempts in three pages to tell just
what should be done to bring Ito an
end the disastrous def1ation" which is
markets of the world in its grip. He
makes five suggestions:
First-The Indian government should
forthwith stop selling silver and return
the rupee to its pre-war level Q6
PENCE.
Second-Great Britain should revert
to the former fineness of its fractional
silver currency standard silved Gas
fine).
Third-France should resume silver
coinage on substantial scale.
Fourth-Mexico should revert to its
ancient coinage
Fifth-The United States should help
finance any or all of these operations
as its contribution to the defense of the
gold standard.
DR.. Icons suggestions have the adj
vantage of being specific and clear-cut,
They are made by one who shows a
mastery of the subject. The weakness
of the plan is political, not economic;
for it consists in getting many different
countries to agree on a money plan.
And very few men-either business men
or politicians-understan the place of
silver in the world.
Branch Banking.
Is the powerful Chase National
Bank and its associates going to lead
Albert H. Wiggin came out. squarely
opposed to Federal legislation which
would force the great banks of the
United States to engage in the COM
petitive struggle for the acquisition of
branches throughout the country. He
thinks every community large enough
to support a strong. well managed, in
dependent bank should have one,
although it might be desirable for
small communities to have inexpensive
branch banks. Therefore, let the
States adopt any needed legislation and
give the national banks the same
rights that are given to State banks.
However, Mr.. Wiggin foresees trou-
BILE ahead in reconciling initiative in
the branch, with control at the head
office especially in country so large
as the United States, where frequent
touch of the branch manager with the
head Office is impossible.
But Canada country really hun
dred miles wide and 1900 miles long
shows quite the reverse of the Wiggin
picture.
bank stocks? Should holding COM
pany that owns stock of a banking
institution be required to maintain re-
serves or surety bonds to protect the
statutory double liability which at
taches to such stock?
Superintendent of Banks Broderick
of New York says yes The failure of
the Bank of United States and the
bankruptcy of its affliated holding
companies, which owned a great deal
of the banks Stock-a practice which
is not confined, however, to New York
Etate-raises the issue anew.
Double Liability.
few weeks ago the bankruptcy Of a
MI. lzz1A NH
owned large blocks of stock in the failed
National Bank of Kentucky brought it
to public attention.
Every bank-both State and ma
tional-has attached TO its stock a
double liability, should such recourse
be necessary to protect the interest OF
the depositors. For many years no one
but an individual was permitted TO own
bank stock. In recent years the growth
of the holding companies has changed
all this. Many of them own large
blocks Of stock in various banks
throughout the country.
Manifestly, if the double liability
feature is to be enforced against indi-
vidual stockholders the same provision
should apply to corporations-corpo-
rationS owning bank stocks should not
be able to escape the penalties which
ar imposed upon the individuals In
case Of any trouble.
Probably special legislation is needed
in many States to safeguard the double
liability feature
In the case of the bankrupt holding
company that controlled the failed
Kentcky banks both State and ma.
tional. its total assets almost consisted
of the worthless stocks of the. institu-
ton whose downfall had been FASTENED
If not caused, by the Vaccinations Of
the holding company's management
according TO the New York Journal Of
Commerce.
This recommendation OF Supt Brod.
erick should be pressed, not only In
New York, but in every State in the