Montana labor news., 1933-03-09
BANKERS TURN
DOLLARS INTO
NICKELS, FAILS
(By FRANK L. PALMER.)

NEW YORk-(FP)-Iurnlng h
AZ billion dollars in American banks
into nickels doesn't work.
With the growing talk of a nation
al moratorium which would tie up the
whole banking structure this fact,
which should have been evident even
to a banker when the nickel plan start
ed, seemed perfectly clear.
The nickel plainly which a bank
suddenly announces that 95 per cent
of its deposits cannot be withdrawn;
that only a nickel per dollar a be
taken-allows the insolvent bank to
evade its responsibilities for the mo-
ment. It allows the bank to escape
the first principle of banking law,
that it is illegal for an insolvent bank
to accept deposits. But it ignores the
law of self-preservation, the law that
makes depositors throughout the a
ton, seeing creeping paralysis affect
ing banks in one state after another,
get out their cash before the nickel
plan hits their banks. That happen
ed, of course, and the bankers little
plot didn't work.
So dumb did the bankers think de-
positors that some banks announced
they would pay but 2 per cent or wen
1 per cent, and in a couple of cases it
was reported that banks blandly an
nounced they would remain open for
deposits but would allow no withdraw
ais at all.
The nickel plan (like other meth
DDS of solving the depression offered
by our best minds) was wrong. 1t
was wrong psychologically because the
depositors were not as dumb as the
bankers thought. It was also wrong
from another angle. Said Mark Sui
livan, most conservative of commen-
%tators, ut turns out that the device,
while fine for the banks, is decidedly
not good for business"
Even after the February panic
doubled the billion dollars in currency
in boarding so that outstanding cur
rency reached about six billions it was
still true that by far the greater share
Of business was done by check. This,
too, the bankers ignored in their
frightened dash for cover. Business
had sagged so under the weight of the
nickel plan in Michigan that steel pro-
duction dropped from 20 per cent of
capacity to II per cent Of capacity to
mention but one industry. The bank
ers had never thought it out that bust
ness is just as necessary to banking as
banking is to business.
This banking debacle was probably
the final crash of the Hoover regime.
The 38-month record of trying to stem
the avalanche first with denials that it
exists and then with support only of
banks, insurance companies and rail
roads has made as nearly a complete
failure as could be readily imagined.
All these months workers groups have
been saying over and over, 'This plan
will not work. To restore prosperity
it is necessary to restore purchasing
power, thus restoring consumption,
thus restoring distribution (giving the
railroads income, not loans), thus re-
storing production and payrolls." To
such a plea by outstanding progress
sives in the spring of 1881, Hoover
said, "You are six weeks too late; we
have turned the corner"
Seldom in history has a president
taken over so bankrupt, so damned,
ditched and drained" a country as
Roosevelt does. Never has the con-
fidence Of the American people in their
financial and industrial leaders been
at so low a point. That is equally true
Of political leadership except that mil
lions pin one last hope on Roosevelt.
has the talk of revolution swept
the country as it is now sweeping it;
millions are saying: "Give Roosevelt
a chance and if he can't put men to
work and give farmers a decent price
for their products we'll take the
stored-up food, the farms and the fac