The Bismarck tribune., 1931-10-13
Reinsurance
New York World-Telegran)

The federal government has step
ped in to prevent a national bank
ing crisis. That is the significance
of last nights white house conference
and President Hoover's announce
ment of a program of action. In
stead of letting matters drift further,
the administration has faced the
emergency and moved to meet 1t.
That fact alone Is one of the most
reassuring that has come out of the
depression. It should revive hope in
the discouraged business community.
Mr.. Hoover has assumed leader
ship. The people will not follow him
blindly. But they will follow any
reasonable line of march.
The presidents program Is not
complete-and by the nature Of the
case it cannot be at the moment.
But it does attack the problem at
the point of immediate emergency.
That point is the jam Of frozen as
sets which endangers many banks
and blocks the free flow Of normal
credit for legitimate business.
To break that jam the president
proposes the cooperation of unem-
barrassed banks in making advances
on securities of closed banks to free
part of the .latter's deposits. This
process is going forward and will re-
lieve much distress this winter.
Moreover he has arranged for pri-
vate mobilization Of banking re-
sources to form a $500 900 900 insti-
tuition to rediscount frozen assets Of
banks which might otherwise be
forced to the wall. Certainly that is
an important move in the right di-
rection.
If that $500, 900 900 fund is made
quate for the purpose, and II private
sources fail to produce a sufficient
! amount, he apparently intends to
bring federal funds to the rescue.
Though he Is not specific, that
seems to be the purpose Of his state
ment that he may ask congress to
create a federal finance corporation
somewhat similar in character to the
War Finance Corp. Here again Mr.
Hoover is on a sound course.
! His proposal for broadening the
eligibility provisions Of the Federal
Reserve act is doubtless necessary to
make the assets Of banks more Ii.
quid. Obviously. however, this Is q
two-edged weapon. Unless 1t Is used
with discretion it can weaken more
than strengthen the fundamental fl.
nancial structure of the country.
The test will be In the detailed pro.
visions of the law. Mr.. HoCver's in
timation that the congressional bank.
ing committees will be allowed suf'
ficient time to consider this matter
is fair enough.
Since banks in agricultural com
munities suffered first and perhap!
have suffered most, his proposal tina
congress increase the capitalization
of federal land banks is timely ane
reasonable.
For some reason the president dit
not make hts expected declaration
, for an extension Of the one-year war
debt and reparation holiday to thrc
years. There Is little doubt, howeve,
that he will be forced by events Il
r that position-if not to outright can
e collation..
: Unfortunately, the value Of such
moratorium extension or cancella
ton will not be great If 1t is post
y poned too long.
j Frankly, highly praiseworthy as W
8 regard it. we do not believe that tn
Hoover program as announced las
y night is complete in itself. We be
y lieve the remedy must go beyond a.
: improvement in the technical bank
ing situation, important as that Is.
, We believe that the government
y among other things, must initiate
% national planning system-such q
It proposed from different angles
r Mr.. Swope, of General Electric, an
"a by Senator La Follette-to facilitat
cooperation Of industries a3 the pree
g ident Is now insisting on the coopera
ton Of banks.
And we believe that the govern
k ment itself must stimulate buyin
n and provide jobs by much larger put
lie works than are now under way
All Of that involves a recognitio
q by the administration that it is tt
Y. duty of the government to take ov:
l. leadership in this peace emergec.s
as it assumed power and direct!e
during the war emergency.
. That the president has taken Il
IS first step in that leadership shou
If be an occasion for national satisfa,
4, ton.
+ BATTERY RUNS TRAIN