Evening star., 1931-12-29
BANK CREDIT CALI
|SBPECTED SOON
New Corporation LikeIyf ID
Begin Active Work Early.
s.
in January.
BY CHARLES F. SPEARE.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, December 29.-The new
epidemic of bank failures this month,
which will make the total or December
suspensions considerably larger than
that of November. has led to question
ings regarding the operation and efh-
cheney of the National Credit Corpora {
ton, which was created three nioriths !
ago and out of which there developed +
immediate improvement in NATIONAL
sentiment toward the banking situation.
1t is understood that there has not
yet been call on the part Of the,,Gor-
poration to the subscribers to it for any
part of their pro rata share in the
$500,000,000 fund to be set up and az
ministered by it. Where money, ha
been needed to assist banks in trouble
1t has been borrowed from the ind
stitutions in the central Reserve lottie
on the note of the corporation. rIt"ia
probable. however, that the first. cal
will be made early in January but bta
it will be for small amount. possibly
5 per cent of the total Obligated BY
the subscribing institutions. tS
Procedure Not Understood. rn;a
Although the National Credit Corpo-
ration and its functions have been
widely advertised, there is still cUnStd (
cradle mystery about it and some
ignorance of its purposes in the interior
of the country. The other day d re- /
quest came to New York banklforl
assistance to a correspondent in Ten
nessee. The applicant was referredtto5
the representative of the National
Credit Corporation in its district. The
reply came back, What is the National
Credit Corporation?" This is an Tex-
treme case but where emergency con-
ditionS have arisen in parts of the East
lately it has been evident that those
who should have known more in detail
about the agency established to assist
embarrassed banks actually had very
little conception of the procedure neees-
sary to obtain credit assistance.
Further than this, it has been found
that the functiening of the corporation
has been cumbersome and quite Stow
where an acute crisis compelled quick
action. -.
Not a few of the applications tp the
National Credit Corporation have been
from banks that expected to be. pro
vided with additional working capital
cut of the proceeds of the fund but
whose position did not entitle them
to consideration under the PROVISIONS
of the corporation charter. ThiSe Was
specifically indicated in the statement
issued by Chairman Buckner Of the
corporation on october 7, when he said
that banks will not have the privilege
of applying for cash where there is
no immediate need On the other hand,
where an emergency exists accoprpp-
dation may be procured upon the basis
of sound assets" that are not legally
eligible for rediscount at FederalA Re-
serve banks Perhaps one of the, ,Tea-
sons why the National Credit Corpora
tion does not appear to the uninitiated
to be functioning smoothly and sue
ceSsfully is that so many application
for loans are from institutions, that
have a meager amount of sound, as
sets" and are allowed to fail. II has
frequently been found that their situa-
ton was more or less hopeless, that
to give them additional funds would
not correct conditions which in ., the
end would lead to liquidation. "
Real Estate Loans. 7
This is where banks are entangied
in real estate loans made at the peak
Of the real estate market, or have SIf-
fered a severe depreciation in SacuTi-
ties of an inferior character and Of
the type which bank examiners compel
them to mark down to the maximum
degree Careful discrimination has to
be made by the Loan Committees in
the various districts between assets
that are normally sound" and assets
that may remain in frozen" cohdi-
ton for a considerable period of time.
There is some question Whethet the
National Credit Corporation. may not
be superseded by the Reconstruction
Finance Corporation, which will have
the right of way in Congress wher' it
reconvenes next month. 1t is felss by
some that the former has been simply
an emergency or ''stop-gap" organiza-
ton and that when the newer and
larger corporation is brought to work
ing basis it will have greater scope and
more power in dealing with barking
problems Not only will it come to the
rescue of banks that are threatened
with suspension, but will give aid to
those that have gone down and release
to depositors as soon as possible the
$4,000, 100000 due them.