Evening star., 1932-04-17

curing three reports year on these.
| At the end of three years no certifi-
cate representing the stock Of any State
member bank shall represent the stock
of any other corporation.
In an explanatory statement, Sen
ator Glass said the committee, after
the recent hearings, stripped the meas
ure of certain features which afforded
the enemies of all banking legislation
a plausible excuse to raise objections
and gave them tenable grounds to
initiate propaganda and to stimulate
antagonlsms.
Quite a few changes" said Senator
Glass, have been made in the technique
of the bill there has been considerable
clarifcation of nomenclature and like
wise there have been cleared away some
of the mis- is-interpretations so repeatedly
presented and corrected at the hearings
ended two weeks ago. However, not
a fundamental provision of the original
bill has been materially altered. The
subcommittee simply devoted itself to
stripping the measure of certain fea-
lures which afforded the enemies of
all banking legislation a plausible ex-
cuse to raise objections and gave them
( tenable ground to initiate propaganda
and to stimulate antagonisms.
Bills Language Modified.
Undoubtedly there We're obscurities
Of language IN the bill as originally
drafted which prompted some perfectly
/ sound and honest bankers to ascribe to
the measure certain def1ationary effects.
/ These provisions we're explained as the
hearings progressed and the language
of the modified bill has made clearer
the intent and we have good reason to
suppose that the reasonable objectors
or O. -
become q law. The subcommittee. as
now the full committee, accepted liter
ally some OF the alterations suggested
unanimously by the Federal Reserve
Board and rejected others.
For example. we accepted without
( changing word the boards proposed
/ section 3 Of the bill. dealing with vital
/ powers OF the board itself. embodied
/ teXtually and by every reasonable i'm
pllcstion in existing law, but more GER
/ talnly and imperatively expressed in the
provision recommended by the board
/ This provision of the bill adds little to
/ the powers Of the board, but gives un-
mlstakable emphasis to It's obligations.
InlS section is simply more compre-
/ henSlVe and more unmiStakable than
section 3 OF the original bill It enables
the Federal Reserve Board to safeguard
/ SAtS ASctA fC AuIldo Ol lIlp country against
the depredatlons of speculating inter-
ests even when Federal Reserve banks
snail prove derelict in this respect.
Another vital provision of the bill
! Is section 8, dealing in a rather more
! peremptory way with this problem
Ihls section has been modified by
eliminating the minimum penalty of /
per cent in the use of 15-day paper by
member banks of their direct pronis-
| sorry notes. Some of us felt from the
beginning that this penalizing clause
was unnecessary, since Federal Reserve
banks. with the approval of the Fed
eral Reserve Board, are authorized by
existing law to establish at their dis
cretion rates for such transactions
Hence this change was made without
olSsent in the subcommittee or the gen.
era! committee, particularly as it cut
the ground from under those oblectors
VINO seemed simple enough to think
that the United States Government is
unable to float its obligations without
the actual aid of the Federal Reserve
banks. No member Of the subcommit-
Tee or OF the general committee eX-
pressed the slightest dissent from the
requirements of this section, but several
members OF the committee proposed to
extend and stiffen these requirements In
II,
was not done by the committee. but the
proponents of the proposition reserved
tne right to renew the attempt in the
Senate.
Set-up Is Altered.
The subcommittee. approved unani-
mously by the general committee. some
what altered the sct-up of the Liuuidat-
ing corporation, both as to its capitali-
zatlon and its executive administration.
instead OF the board Of directors con-
SsGlng OF IA members, We have pro-
Vloed FOR board of 5 members, one of
them the comptroller of the currency
one a men Der of the Federal Reserve
Board TO be designated by that BODY
and three selected annually by the gov
ernors fthe II Federal Reserve banks.
Inc capital OF the Liquidating Corpora
tlon Is to be Sl25,000,000. to be an
proprlated from the Treasury as a par
tial return of the franchise tax paid
INTO the Treasury out of the earnings
OF the Federal Reserve System. This
recaptured sum is to be regarded as
paid IN surplus. The capital stock of
the Liquidating Corporation is to be
Iurther augmented by a contribution
from the II Federal Reserve Banks
equal TO one-fourth of their surplus
funds as of July /, 1882 and by a sub
Scrlption from member banks Of one
fourth Of per cent of total deposits as
OF July /, 1882. One-haf of the sub
scrlptlon by the Federal Reserve Banks
ana by the member banks will be call
able at once, IL is not expected that
the other half will ever be called al
though subject 20 be called at the
discretion Of the board OF directors.
The board Of directors is authorized
also TO issue debentures, if ever
necessary, to the amount OF twice the
established capital of the Liquidating
corporation. Seventy per cent OF the
earnings OF the corporation goes to the
revolving fund and 80 per cent as an
additional dividend to member banks
OF the Federal Reserve System.
Another important, and extremely
controversial, alteration in the bill re-
lates to branch banking The bill
originally provided for branch banking
by nationl banks III those States that
permitted Statewide branch banking.
The bill AS modified authorizes national
banks 10 engage in Statewide branch
/ banking, under the specific regulations,
in all the States regardless OF State
| laws on the subject An attempt was
made in committee TO alter this re-
gun ement by confning branch banking
/ to those States which permit branch
banking by State law. but the commit
tee. by a very considerable majority,
declined TO make the change.
Realty Clause Dropped.
We eliminated from the bill the
real estate reValuation clause, which
was regarded as both impracticable and
undesirable, but which constituted a
peg upon which defiationary' protes-
! tants hung objection. We also elimi-
mated from the bill all Of the proposed
changes IN reserve requirements. The
suggested restoration Of the Z per cent
reserve behind time deposits was
prompted by the utterly irregular
manipulation of deposits by large
,,ercentage of bankers who were intent