Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-09
BOARDING CALLED
MENACE DONATION
Cuts Credit, Reduces Bust
ness, Increases Idle and
Makes Banks Apprehensive.
BY MARK SULLIVAN.

In the banking situation and the
business depression, which caused Presi-
dent Hoover to take his present step. the
largest one present contributing factor
in the whole complex is the practice OF
many persons who are boarding cur
rency in safe-deposit boxes or under
mattresses or in other hiding places.
The feeling about it among bankers
and some financial officials OF the Gov
eminent Is illustrated by the radio ad-
dress made Tuesday night by the gov
ernor Of the Federal Reserve Bank OF
Philadelphia. George w. Norris. in which
he described boarding as "pernicious
practice" and characterized hoarders as
'infiicting a terrible injury" With per-
haps some overemphasis Gov. Norris APP
pealed to hoarders to choose whatever
bank you want, but for Gods sake In
your own interest. do not take money
out OF banks to put II in hiding"
The terrible injury" done by hoard
ers lies, in part in the fact that hoard
ing causes banks to be apprehensive
and therefore causes them to keep an
abnormal quantity Of their deposits in
currency or vault cash" to be ready for
hoarders who may ask for It,. Because
the banks resources are kept in the
form of vault cash" they obviously
cannot be loaned to business borrowers
no matter how sound. and thus business
is kept depressed and unemployment OF
labor prolonged.
Doing Lot Of Damage.
Because of this and other results OF
boarding, it is accurate to say that this
practice is. among all the factors in
the depression, the one that is doing
most damage at the present time. This
quiet and usually rather furtive hiding
OF currency is worse than the open
runs on banks because the aggregate
of the seepage for boarding is much
larger The quantity of dollar and
! other bills thus withdrawn and hidden
| is estimated at close to a billion dollars.
! This means that roughly NTH or all
the currency outstanding in the coun-
try is hidden away and thus taken out
of circulation. That is really menace.
One dollar in currency boarded means
roughly $40 in credit made unaVail
able That in turn means just so much
business reduced and so much labor
unemployed. The aggregate, when null
tiplied by billion. is enormous.
Hoarding. if carried far enough, would
cause literal complete business paral-
ysis.
Some gold is being boarded but COM
paratively little. Most of it is bills. The
practice up to the early part Of this
week at least was growing. The guam
! tity of the seepage last week alone Is
estimated at nearly 100000 900 The
total quantity can be readily estimated
from Treasury figures. Last year, on
October l. there were 81 .376,3 5l 900 Fed
eral Reserve notes in circulation. This
year. on October l. the quantity was
| tity OF notes in circulation has increased
by 1921 .442. 900 in a year. Everybody
knows the quantity should not have in
creased at ALL but decreased. because
business has slowed down and less cur
rency is therefore in use. The infer
ehce is unmistakable that the 1921 ,442,-
900 Of additional notes. together with
some other forms of currency. has been
| hidden away. To this statement there
| is one qualification. Some of the dis
| appeared currency has gone abroad.
| Foreigners, suspicious about their own
currencies, are taking pains TO get hold
Of dollars This is a compliment to the
dollar and to us and cannot be pre-
vented.
HOa riding Real Peril.
It is imperative. however. that our
| own people should see that boarding by
! them is decided disservice to their
/ communities. In the aggregate 1t is
real peril. TO the country as a whole.
! Appeals to the public not to practice
| hearding are called for by the condi-
| tions. Some Of the appeals emanatlng
| from quarters other than Washington
have not been fortunately phraSed.
Speakers at the American Bankers
| Association in convention at Atlantic
! City this week, appealed for spending"
! Spending" in the ordinary sense does
| not meet the boarding situation. People
| who wish to save and TO make their
| savings secure are entitled to do so.
Appeals to them to spend" in the or
binary sense are likely to give offense
| and certain to be futile.
A proper appeal, effective If carried
out, would be that such persons avoid
hiding their currency, but achieve the
same safety by other means: Money
deposited in Postal Savings Banks,
available at every post office, is much
more safe than money in stocking or
! under the kitchen floor. Such money Is
! just as safe as the United States Treas
ury. Moreover. money deposited in pos
! tai savings banks draws to 2i2 per
cent interest, which money hidden away
| does not Another way to be absolutely
safe is to buy United States Govern
ment bonds, which can be procured
| through any bank. The recently is
sued United States bonds paying per
| cent interest. and constituting literally
the finest investment in the world, can
be bought at about $97 for a 500 bond,
or about $48.50 for a $50 bond One
form of spending that would roughly
meet the situation and satisfy the APP
prehensionS of the hoarder would be the
| buying of land, homes, EARNS or other
forms of real estate.