The Waterbury Democrat., 1932-04-15

given the smaller national panks
OF the nation has ruined 80 per
cent of the communities of the
United States and is responsible for
90 per cent of the present business
depression and unemployment cy-
Gle, Congressman Wright Patman
of Texas asserts in an article in
plain Talk" Magazine.
Mr. Patman states that most
small banks were forced to buy
foreign bonds which have turned
cut to be worthless or nearly so,
and that these foreign bonds were
nut out by Wall street bond houses
at huge commissions to themselves.
AS a remedy he suggests that the
so-called Reconstruction Finance
corporation, which he refers to as
the two billion dollar international
bankers dole corporation, pay
back to the banks the money they
lost in these forced investments"
and then collect this sum from
those who participated in the sand
bagging.
Secretary of the Treasury An
drew Mellon sandbagged the small
bankers of the United States into
buying hazardous securities. and
by throwing, the American bank
ing system out of balance, Is more
than any other factor, the cause of
the present depression. Congress-
man Wright: Patman, OF Texas,
continues II, his article In the May
issue ots"Plain Talk" Magazine. He
points ont that during the Mellon
reign over affairs 1--WE. have had
8,062 bank failures, compared with
G74 in the preceding ten years.
Banks In cities with a popula-
ton of less than $4,000, up until
about ten years ago" continues
Congressman Patman in his article
'ioafed practically tall Of their
money to- residents of their respec-
tive comm unities. This money was
lcanedb Oh. personal notes. and the
security usually consisted of one
or two other residents of the COM
Elunity signing the note. Some ten
years ago the comptroller of the
currency advised 1.-The banks to
build up what Is termed "a secon-
dairy reserve. This consisted of
bonds and other outside securities"
This secondary reserve account
ed for about twenty-fiv per cent
OF the money loaned by the. bank.
In 1928, the comptroller of I. the
currency began ,toyurge the coin
try banks to increase their secon-
dairy, reserve to forty per cent.
Since the comptroller OF the cur
RI ncy examines: the banks and has
the absolute right to pass on the
securities that "a bank may hold, a
recommendation from the comp
troller becomes; in effect, a direct
order"
This was, later increased to fifty
per cent, SO that practically one
half OF the money that the country
banks had loaned in their respec-
tive communities had been taken
put of the community and invest
o. in outside securities" After the
crash Of 1929, the banks were
urged to cut down on their local
loans by the comptroller, with the
result "that for the last two years
a local customer of a bank has
been absolutely unable to nego-
tiate loan from his local banker"
How the market was rugged by
the government officials for the big
bankers of Wall Street and how
the country banks were sand
bagged into a false economic posi-
ton Is told by Congressman Pat
man by citing the case of bank
in Virginia. I'm 1929 n large force
of bank examiners from the Office
of the comptroller Of the currency"
John w. Poole, sailed forth from.
Washington rigging the market
in every small town in the United
States for worthless foreign bonds.
In the course of his rounds one of
them visited the First National
Rank of Luray, Va, apparently
ms king one of his periodic exam
nations. He went over the loans
shown him by President Julian s.
Price. He suggested that this loan
and that loan be called.
What mattered 1t to Mellon IL
every local business man whose
loan was called was ruined?" asks
Congressman Patman. President
Price was asked to build up larg-
CIR secondary reserve and his at
tention called to foreign bonds.
They" said the examiner. '.are
listed on the stock exchange.
They. comply with the amendment
TO the National Banking Act. OF
Feb e5. 1891
"a few days later continues
Congressman Patman. ''salesmen
nom Dillon Read & Company,
New York. Lee Higgins &: Com
iAn., OF New York, ard Boxer,
Watts q Company. OF Baltimore.
underwriters OF soine OF the worth
Ices south American bonds which