Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-03-24
BANKING REVISION
BILL CRITICIZED
Declared Disadvantageous to
Country in General Before
Senate Committee.
BY the Associated Press.

BY the Associated Press
Features of the Glass banking re-
vision bill were criticized before a SEN
ate Banking Committee today by Will
son w. Mills, chairman of the board
of directors of the First Wayne Ma
tional Bank of Detroit, as "disad-
vantages to banks, communities, busi-
ness and the country in general"
He turned his attention first to sec
ton which he said would limit bank
holdings of mortgages to so per cent
of their time deposits.
In addition he said, it would classify
as mortgages all loans where the
ultimate payment depends on real
estate.
A provision requiring an appraisal
of mortgages every time a bank is
examined, he said, would be difficult of
execution in the case of a bank SUCH
as his own. which holds $4,000 mort
cages.
He advocated changing the bill to
provide that the State law in force
where the bank Is doing business be
allowed to govern in respect to mort
cages. ,.
bank must deposit in the Federal Re-
serve Bank on demand and time de-
posts also drew Mills criticism.
The bill. he said, would increase the
reserves "unjustly and without any
benefit to the. country"
Senator Glass, Democrat. Virginia,
author of the bill, said the require
ment had been made necessary by
manipulation of time and demand de-
posits by bankers"
Little Manipulation Known.
Mills replied that it had been his ex-
perience that there had been very lit
tie of that manipulation
i don't know of any bank that has
failed on account of improper reserves, :"
Mills said.
4 know some that have failed on
account of lack of liquidity, and don't
think there is any longer connection
between reserves and liquidity"
Mills said that to meet the increased
reserve requirements the banks would
move to offset them by increasing their
interest rate to borrowers and lowering
the interest rate paid to depositors.
That" he said, would be disas-
trous"
He added that it would be "only hu-
such a move.
Well the banks certainly have their
share of human nature" observed Sen
ator Glass, smilingly, because they al
ways want us to decrease the reserves
and never TO increase them"
"Hearding" Discussed.
The discussion turned to the conten-
tion-advanced in the Senate last
hxT nt0v-
are boarding" assets eligible for Fed
eral Reserve rediscount.
Mills said that in Michigan not more
than per cent of eligible paper is be-
ing held by the banks
Mills objected to the bills provision
for a "liquidating corporation" de-
signed to protect depositors in case of
q bank failure, on the ground that the
FEDERAL Reserve banks were required
to contribute too little to the fund and
the member banks too much.
He said there is no apparent profit
for the banks in such a corporation and
expressed the view that il they were
given their option none would join 1t.
Mills added, however. he was con-
WINGED the banks should join in helping
each other"
That's the real purpose" said Glass,
stock Gambling Restriction.
At one point Glass reminded the wit
ness that the purpose of the bill was to
restrict use of Federal Reserve facilities
for stock gambling"
Mills replied that he believed "the
cure is going to cause another disease
and a very serious disease In Govern
ment financing
Robert o. Lord president of the
Guardian National Bank. Detroit, OPP
posed restrictions on group banking,
describing them as unnecessary and
unfair in view of the honesty and
standing of these institutions"
Group banks, he said, have contrib
uted more to stability than unit banks.
Lord said it seems especially dan
gerous at this time to destroy or i'm
pair by legislation" the functions of
the country's banking institutions.
THE effect on business and the coun-
try would be far more serious than on
the banks themselves" he added.