Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-30
GOOD Management
|. VITAL IN BANKING
Sound Policy of Institutions
More Essential Than Laws,
Witnesses Declare.
BY CYRIL b. UPHAM.

Testimony before the subcommittee
OF the Senate Banking and Currency
Committee, which is studying the Fed
eral Reserve System and the national
banking system, has brought out that
there is general agreement on at least
one point-that the prime essential in
banking is better management rather
than more laws. AS Edmund Plat,
vice president of the Marine Midland
Corporation and former vice governor
Of the Federal Reserve Board, phrased
it: Good bankers make good bank
ing"
While there have been recommended
lions for changes of minor character in
the law, and while advocates of branch
banking have pressed that system as @
method of improving the financial serv-
ice rendered to small towns and rural
areas, the main emphasis has been upon
an improvement in bank management.
Banks AbsOlved in Speculation.
The banks, on the whole, have been
absolved from blame for the speculative
abuses of 1923 and 1929 and the de-
preston which followed. Some of the
witnesses, notably Adolph G. Miller,
member of the Federal Reserve Board,
have given as their opinion that the
reserve system itself must accept a
share of responsibility for the excesSeS
of speculation, because of their extreme
easy money policy of 1927 and after.
Others have declared that part of
the responsibility attaches to business
itself; that commercial interests were
pursuing speculative tendencies and
following infiationary practices, The
public comes in for a share of Same.
All are agreed that speculative extremes
are bad, and some are convinced that
| they are inevitable.
Among the possible remedial meas
| ures that have been suggested so far
are prohibiting or limiting access of q
member bank, which is making security
| loans, to the rediscount privilege at the
reserve bank; prohibiting or regulating
strictly the security afiliates of national
banks; prohibiting so-called bootleg"
| banking, or direct market loans for &C
count of corporations, firms and in
dividualS; a higher rate for loans on
security collateral than on commercial
paper collateral; reduction in the cap
| ital gains tex; maintenance of the re-
! discount rate above the market rate;
acceptance of clearing house certificates
| by the reserve bank as collateral for
member bank borrowings; segregation Of
assets behind thrift accounts in CONNER
cial banks: increasing the reserve to be
|
an extension of branch banking.
Security Loans.
I A recurring question is as to the pres
ent position of the banks of the country
so far as security loans are concerned.
The controller of the currency, John w.
Pole, in his testimony offered the opin-
ion that banks are not less frozen now
than they have been. Others have ex-
pressed the view that there has been
not inconsiderable improvement in
this respect. Albert H. Wiggin, chair
man of the Chase National Bank, be-
lieVes that the controller is right and
that the present low rates of the Fed
eral Reserve System and the market
generally are retarding the liquidation
of these security loans. The public is
: still stock-minded in Mr.. Virgins opin-
ion, and is waiting for the rebound Of
stock prices.
| Copyright. 1919