Evening star., 1933-03-30
OPINION SUPPORTS
j. s. BANK CONTROL
Reserve Board Counsel Says
Congress Has Power to
End State Systems.
BY the Associated Press.

The opinion that Congress has power
to do away with State bank systems and
to concentrate the Nations banking
business under Federal control has been
put forward by Walter Wyatt, chief
counsel of the Federal Reserve Board.
The opinion was published in the
boards monthly bulletin yesterday and
came to light at time considered most
significant in view of the moves for
banking reform advanced as result
If the recent crisis.
Many members of Congress are urging
a unified national banking system, many
of them having introduced legislation
to that end.
WAITS opinion was prepared last
December for the Senate Banking Com
mittee. Senator Glass, Democrat, OF
Virginia, had requested it on the
strength of testimony by Eugene Meyer,
governor of the Reserve Board, that
competition between Reserve member
. banks and non-member State banks
had been seriously hampering American
banking.
Court Opinion Cited.
Citing Supreme Court opinions in
support, Wyatt placed strongest stress
on the point that Congress; having ere
ated the national and Federal Reserve
banking sysems, has authority to pro-
vide them with safeguards by ellminat-
ing competition from State banks.
The power of Congress to so act was
rested by Wyatt principally upon Su-
preme Court decision upholding the
charter granted in 1916 to the Bank OF
the United States. With 1t he cited
decisions which he contended left little
room for doubt that Congress had ample
authority to restrict to national banks
the business of receiving deposits sub
ject to withdrawal by check.
Wyatt gave these principal reasons
for his conclusion:
81 The power to create the national
{ banking system and the Federal Reserve
System as useful instrumentalities to aid
: the Federal Government in performance
of certain important governmental
; functions includes the power to take
such action as Congress may deem
! necessary to preserve the existence and
promote the efficiency OF these systems.
- Having provided the country with
: national currency through the national
banking system and the Federal Reserve
System, Congress may corstitutionally
preserve the full benefits of such cur
lency for the people by appropriate
legislation.
10000 Failures in IL Years.
; "3. The existence Of a heterogeneous
banking structure in which there have
been more than 10000 bank failures
during the past II years constitutes
burden upon and an obstruction to in
terstate commerce and Congress may
0;r1o 70
this condition"
Wyatt said any one of these grounds
would Be a sufficient constitutional
justification for enactment Of legisla-
ton restricting the conduct OF the COM
mercial banking business to national
banks; and, when all three grounds are
considered together, there can be no
doubt that such legislation would be
not only constitutional, but also entirely
appropriate and in accordance with a
proper division of authority between the
Federal Government and the States"
Having the power to conflne the
commercial banking business to ma
tional banks Wyatt asserted, Con-
gress can exercise that power in any
manner which it deems appropriate and
adequate for its purposes"
Legislation Suggested.
He suggested as means to accomplish
this end that Congress could:
Forbid the receipt of checking de-
posts by any individual, partnership or
corporation other than a bank or
ganized, under laws of the United
States. and provide penalties for vio-
lation.
Impose prohibitive tax on all checks
and similar documents drawn on, or
payable at, banks not organized under
the laws of the United States.
Forbid any officer of the United
States or any Federal Reserve bank,
national bank, Federal land bank. ETC..
to receive for any purpose any check
drawn upon any non-national bank.
Forbid any national bank to permit
use of any of its facilities by any nom
national commercial bank.
Forbid deposit of United States funds
in any such bank.
Exempt all national banks from taxa
ton, State or Federal except taxes on
real estate.
The Senate Banking Committee will
consider new banking laws soon. Presi-
dent Roosevelt is prepared to advance
legislation remedying weaknesses as he
sees thems