Evening star., 1933-03-26
Banking Problems and Euro
pean Situation Dampen
Spirits of Traders.
RAIL SHARES DISPLACE
UTILITIES AS LEADERS
Financial Community Is Apparent
ly Waiting for Clearer idea Of
National Legislative Program.
BY CHARLES F. SPEARE.

BY CHARLES F. SPEARE.
Special Dispatch to The Star.
NEW YORK. March 25.-The serious
problems that have yet to be considered
and solved before this country may ex-
pect revival in business, plus the war
scare in Europe, sobered Wall Street
this week and erased a substantial
percentage Of the gain in securities that
followed Immediately after the ending
OF the bank holiday.
It was evident in business circles
that the confusion arising from the un-
known status of banks in different parts
Of the United States had slowed down
trade. Collections were reported as
even poorer than before March 4, when
banking facilities were suspended. The
ratio of iron and steel production to
consumption declined. Although car
loadings were somewhat better than
in the previous week, there was sur
prisingly little evidence of a deferred
movement Of traffic. The percentage Of
distribution of electric energy fell sharp
ly. The rise in bank clearings was
without significance, as it registered
the accumulation Of exchanges during
the holiday"
Effects Of Bank Crisis
The earliest reports Of the banking
situation, after restrictions had been
lifted on all three classes Of banks on
March Is, indicated that 4,700 Of the
total of about $4,000 institutions had
not reopened. This number was latter
reduced to approximately 1000, as Ii
censes deferred were granted and re-
sumption of service on a restricted
basis was permitted. It Is estimated
that the resources Of the banks still
closed represent 10 per cent of the total
of the country, but 1t is to be remem-
bered that in three years to the end
Of 1882 over 5000 banks had closed and
that a considerable portion of their de-
posits are still owing their creditors.
1t IS obvious, therefore, that while
the acute and fearsome phase of the
banking situation Is behind us. there
Is much still to be done, either by
legislation or through the cooperation
Of stockholders with depositors, before
some billions Of dollars Of banking re-
sources can be released to the COM
t1unities now suffering from lack Of
them.
This constitutes one of the continuing
deflationary elements from which some
relief must be obtained If there Is to
be resumption of the purchasing
power of those involved in this predica-
ment. The guarantee idea of deposits
on a national scale is rapidly losing
ground, though it is being promoted by
various State Legislatures. Undoubt-
edly some leniency must be adopted
toward this group of banks to permit
them to function within their local
areas and to receive deposits with q
preferred status over those made prior
to the holiday"
Numerous consultations Of banks are
probable There is no immediate pros
pect of enacting legislation to permit
that are solvent but which have suf-
fered serious depreciation in their in
veStments, they will be compelled to
build up their reserves at the sacrifice
of dividends and by a severe reduction
in their expenses. This movement IS
already under way.
The return of gold coin and gold
certificates to the Federal Reserve banks
has now amounted to about $500 900 900.
This has had a pronounced effect on
the attitude of those who were specu-
lating in exchange on the assumption
that the United States would be forced
off the gold basis. There has been
sharp advance in the dollar. The de-
.mand for the new emergency currency
has been OF minimum proportions.
Practically all banks have had sim
liar experience in receiving deposits
since the holiday" In the ratio Of two
or three to one Of Withdrawals. The
demand for currency today Is limited
to those who need it for their ordinary
expenses and to the meeting OF pay
rolls.
Waiting on CongreSs.
This weeks pause in the upward
movement in securities indicates the
general unwillingness to go ahead until
there is a consolidation of the banef1ts
that have accrued from the several
emergency measures passed by Con-
gress and a clearer idea Of what is
proposed in Washington to assist the
farming group and the millions Of un-
employed in the industrial centers.
At the same time that economies
have been instituted in order to balance
the budget and preserve Government
credit, there are large number OF pius
under consideration in Congress that
will materially offset the advantages
already secured.
An interesting phase of the present
transition is the preference being given
today for railroad stocks as against
those of the public utilities, the escape
Of the carriers from those rate con-
troversies that harassed them and the
transfer of the public's opposition to
present charges for services to the power
and light companies. Three years ago
both the speculator and the investor
turned up their noses at railroad stocks
and talked Of nothing but utility
equities" What they once rejected
they now espouse.
The threatening conditions in Europe
have been reflected this week mainly
in foreign dollar bonds. There has
been some evidence of liquidation Of
stocks for foreign account. On, the
other hand there were no movements
in the foreign exchanges that would
| interpret the anxiety felt in political
circles abroad over the radical demon
strations in Germany. No doubt this
will be q restraining factor on inter-
national trade. It will also seriously
affect the balances of European coun-
tries that depend in part on American
tourist expenditures to meet payments
| in the United States.
Copyright. 1889
QUARTERLY DIVIDENDS.