Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-09
FEDERAL RESERVE
SYSTEM PRAISED
Currency Controller Pole Ad-
dresses Washington Board
of Trade.

The Federal Reserve system has been
a bulwark of strength during the 1929
80 economic depression, preventing
stringency Of currency or credit, and
the rank and file of large city banks
throughout the period of general dis
tress at all times have been in a posi-
ton amply to meet the needs of GUS
toners, John w. Pole, Controller of
members of the Washington Board of
Trade last night at the Willard Hotel
Another speaker John Poole, past
president of the District Bankers AS
ISOLATION and president of the Federal
American National Bank, cited figures
showing that Washington banks had
made "a remarkably strong showing"
Phases of local banking business were
discussed also by Robert v. Fleming,
president of Riggs National Bank, and
Francis c. Addison, jr., president of the
Security Savings 81 Commercial Bank.
Refers to Depression.
Referring to the period of depression
through which not only this country
but practically the entire world is now
passing, the Controller of the Currency
said:
There Is no question but that the
patient is i'll, but he will recover, as
he always has in the past; and the de-
gree to which that recovery is eXpe-
dited or retarded will be measured
largely by our reactions to the conflict
ing statements on the one hand of con-
fidence based on sound, constructive
thought and observation, and on the
other by peSSimism, engendered princi-
pally by fear and disappointment
In the past we have danced to the
alluring tune of false optimism, erna-
mating from inflated values and sky
rocketing security prices. Now we are
paying the fiddler, and the sooner we
come to a full realization of this obli-
cation the sooner this debt will be
liquidated.
THE so-called panics of other years."
Mr.. Pole continued, have afforded OPP
portunities for demonstra ton of the re-
siliency and inherent resourcefulness Of
the American people and a sound basis
for the conviction that we shall emerge
triumphantly from the present depres-
sion with a renewed confidence and
cleared outlook.
No Stringency of Currency.
$50 far as the banking situation is
concerned, the current economic depres-
sion has had less effect than any of
the preceding. Thanks to the Federal
Reserve system, there has been no
stringency Of currency or credit. Nine
ty-five per cent of the bank failures
of the past year have been due to fun
damental defects in country bank or
CARNATIONS which have been evident
for several years past. The rank and
file of large city banks have through
out this period of general distress been
at all times in position amply to meet
the needs of their customers. These
strong banks always have been ready
to offer their facilities to legitimate
business enterprises, and are in
position to play their part in the re-
turn TO business prosperity. 1t is a re-
markable tribute to the inherent
strength and vitality of our commercial
banks that in an economic depression
as severe as that of the year 1880 only
a negligible number of the larger banks
experienced any difficulty whatsoever.
I'VE can only conjecture what would
have happened to the banking situa-
ton had not the Federal Reserve act
been in force. 1t is very likely that
there would have been q bank panic,
due to the lack of elastic currency.
Shows Strength of Banks.
Mr. Poole, president of the Federal
American National Bank presented sta
tistics showing the strong basis of the
banks of Washington. The 80 local ma
tional banks, trust companies and other
banks he reported, have a total capital
surplus and undivided profits amount
ing to SAC 100000 deposits of $267,-
100000 and resources of 1919, 900.
He said it is encouraging to note that
of the total deposits of S267 900 900 only
$3.50, 000,0 900 is subject to check or with
drawal on demand without notice, this
being ratio of approximately five to
one. This. he said, shows a margin of
safety much greater than many regard
as necessary.
Added indication of the strong condi-
ton of local banks is to be seen, he
said, in the fact that the 80 banks
have Sal 100000 in cash in vaults and
subject to draft on other banks $10,-
100000 in cash deposited with the Fed
eral Reserve Bank of Richmond $751;
100000 in Government securities and
S35 900 900 in State, county, municipal,
industrial and other bonds, generally
carried as secondary reserves.
This secondary reserve, he pointed
out, amounts to $4,000 900, or 80 per
cent of the S150,0000 900 of demand de-
posits in local banks, which he termed
a remarkably strong showing"
Describes Increased Services.
Mr.. Addison described the increased
services offered to bank customers in
recent years, and pointed out the rea-
sons for service charges and the re-
quirement of minimum balances. He