The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1932-12-06
HOOVER URGES BROADENED SALES TAX

I first called attention Of the
congress in 1929 to this condition,
and I INCREASINGLY have recon-
mended remedy since that time. The
subject has been exclusively in
yestigated both by the committees
of the congress and the officers of
F, the federal reserve system.
The banking and financial sys-
tenn is presumed to serve in furnish
ing the essential lubricant to the
wheels of industry, agriculture, and
commerce, that is, credit.
It's diversion from proper use, its
improper use, or its insufficiency
instantly brings hardship and dis
location in economic life. AS a sys-
tenn our banking has failed to meet
this great emergency.
Bank Failures in Nation
1t can be said without question
of doubt that our losses and distress
have been greatly augmented by its
wholly inadequate organization. It's
inability as a system to respond to
our needs is today constant drain
upon progress toward recovery.
In this statement I am not re-
ferring to individual banks or bank
ers. Thousands of them have shown
distinguished courage and ability.
On the contrary, I am referring to
the system itself, which is SO or
! gained, or so lacking in organiza-
ton, that in an emergency its very
mechanism jeopardizes or paralyzes
the action Of sound banks and its
instability is responsible for periodic
dangers to our whole economic sys-
tenn
Bank failures rose in 1881 to 1917
per cent of all the banks as COM
pared to II per cent of the failures
of all other types of enterprise.
Since Jan. l, 1880, we have had
1865 banks suspend, with $780,
+ 100000 in deposits.
Partly from fears and drains from
abroad, partly from these failures
/ themselves (Which indeed often
caused closing of sound banks, we
have witnessed boarding of cur
rency to an enormous sum, rising
during the height of the crisis to
over $1,60O,0OO,OOO.
StrangulatiOn of Credit
The results from intersection of
cause and effect have expressed
themselves in strangulation OF
credit which at times has almost
stif1ed the nations business and
agriculture.
The losses, suffering, the tragedies
OF our people are incalculabIe. Not
alone do they lie in the losses of
savings to millions of homes, injury
by deprival of working capital to
! thousands of small businesses, but
also, in the frantic pressure to re-
call loans to meet pressureS of
boarding and in liquidation of
failed bank, millions of other people
have suffered in the loss of their
homes and farms, businesses have
been ruined, unemployment in
creased, and farmers prices dimin-
ished.
That this failure to function is
unnecessary and is the fault of our
particular system plainly is indi-
Gated by the fact that in Great
Britain, where the economic mech
anism has suffered far greater
shocks than our own, there has not
been single bank failure during
the depression.
Again, in Canada, where the Sit
uatiOn has been in large degree
identical with our own, there have
not been substantial bank failures.
Acute Crisis in Part
The creation of the Reconstruction
Finance Corporation and the
amendments to the federal reserve
act served to defend the nation in
great crisis. They are not remedies;
they are relief. 1t is inconceivable
that the reconstruction corporation,
which has extended aid to nearly
5000 institutions and is manifestly
but temporary device, can go on
indefinitely.
1t today is matter of satisfaction
that the rate of bank failures, of
llOd1 u1l1B, dllQ t1lG OGludIlQS UPON
the reconstruction corporation have
greatly lessened. The acute phases
of the crisis obviously have passed,
and the time now has come when
this national danger and this failure
! to respond to national necessities
must be ended and the measures to
end them can be safely undertaken.
Methods of reform have been ex-
haustively examined.
Reform National Necessity
There is no reason now why
solution should not be found at the
| present session of the congress. In
flation of currency Or governmental
conduct of banking can have no part
in these reforms.
The government must abide with
in the field of constructive organi-
zation, regulation and the enforce
ment of safe practices only.
| Parallel with reform in the bank