Evening star., 1933-03-05
HOLIDAYS Of BANKS
HAVE TWO CAUSES
Withdrawal of Gold by Eu'
rope and of Currency in
u. S. Blamed.
ny MARK SULLIVAN.

The immediate cause of the New
York and other bank holidays inaugu-
rated Saturday had two parts On
Friday gold was withdrawn from the
New York Federal Reserve Bank In sucn
quantities as to raise reasonable queS-
tion whether the Nations monetary
gold reserves might be depleted II the
pace of withdrawal should be kept up,
These withdrawals reflected fear in
Europe and at home, whether the
United States Government can or will
continue to keep its currency redeemable
in gold Thus one of the primary ques-
tions which must be answered by Cong
ress is whether the country will con-
tinue on a gold basis.
The other immediate cause of the
bank holiday was the withdrawal OF
ordinary currency of all kinds from
Federal Reserve banks in New York
and elsewhere in such quantity as to
raise a question whether the Govern
ment could supply the demand The
quantity Of currency which the GoXern-
ment can safely give out and still stand
ready to redeem in gold may be said
to be roughly 10 billion dollars. The
quantity normally in circulation is
about 5 billions. Recently the amount
has increased to more than billions
Last week, more was taken out at the
rate of about a hundred million dol
lars day.
The cause of this withdrawal of ordi-
nary currency was both fear and a
condition. The bank holidays in the
various States put bank deposits and
checks out of use. In this condition
there was need for currency. Thus the
other primary requirement now is
hot will tho ho
Michigan Action First.
To go farther back than Saturday, so
far as any one event in the intricate
chain can be called the first, it may be
regarded as beginning with the Michi-
gan bank holiday in February. So soon
as Michigan had been followed by
Maryland, was apparent the movement
would spread and would call for deci-
sion by Washington about appropriate
action. The relation of Washington
to the situation was made intricate, of
course, by the imminence of change
of administration. To say that attempts
at cooperation between President and
President elect came 10 nothing would
be true, but that statement standing
alone would be misleading. There were
repeated conferences between groups in
cluding Secretary of the Treasury Og-
den Mills and other officials of the old
administration and groups including
Mr.. Roosevelt's appointee as Secretary
of the Treasury and his other advisers.
The two groups had complete mutual
respect for each others good faith. AS
an incident of their meetings. Secretary
Mills agreed to cancel trip to Cali
fornia in order to help his successor
carry over. Mr.. Mills important as
sistants were asked to remain in Office
for some time. and freely consented. In
the same spirit. Mr.. Roosevelt asked
Gov Eugene Meyer of the Federal Re-
serve Board to remain in that post.
Tho chief reason for failure of the
o'd and new administration TO agree on
taking some step before March 4 was
lack of unanimity of opinion about
what the step should be. 1t was not
that Mr. Hoover's advisers had one pro-
gram and Mr.. Roosevelt's another. The
cleavages of opinion ran at right angles
through both groups. From day to day
1t became apparent that the ultimate
program must proceed from the new
President. for the reason that ANYTHING
done about banking must fit into the
new administrations financial and
economic program as whole. 1t was
also apparent that anv step taken be-
fore March 4 would have to be carried
OUT IN us Q6tdllS HltcI tIldL UdGe. ILLS
was appreciated as r good reason whv
Mr. Roosevelt should hesitate to ACCEPT
re possibility for sten until he should
have power to carry it out and to fit
It into his program as a whole.
Bankers Differ in Opinions.
The differences of opinion among
financial advisers of both a6ministra-
tions we're duplicated by and to some
extent caused by differences of opinion
among leading bankers. Also the situa-
ton changed from hour to hour. and
step which might have been advisable
in the forenoon became inadvisable in
the afternoon During the tense hours
Friday night, after the necessity for ac-
ton became imperative, there was de-
bate as between two broad plans. One
was that the President, either Mr.. Hoo
yer on the morning of March or Mr..
Roosevelt Immediately after noon, should
declare a bank holiday by national
action. The other plan. was that the
Governors of all the 48 States should
complete what some 80 of them had
already done. In the meetings Of ad-
visers there were members of the old
administration and members of the new
favoripg each plan. The situation was
made complex by the fact that as late
as midnight Friday some leading New
York bankers believed that q bank