Evening star., 1933-04-13

insurance plan may be worked out, it
was said. The President has been un-
derstood to be opposed to an out-and-
out Government guarantee of bank de-
posits. However, if plan can be
worked out whereby the guaranty plan
looks to contributions by the banks and
possibly by the depositors themselves,
with the Government making a small
| contribution, 1t may meet the Presi-
dents objections to an insurance OF
bank deposits. The argument has been
advanced by opponents of insurance of
bank deposits that it would put a
premium on bad banking and that it
would put poorly run banks on an equal
standing with those which are run eff
ciently and soundly.
Bankers Favor Plan.
Against these arguments it is sug-
gested by Senator Fletcher and others
that a sound system of bank deposit in
surance may compel efficient banking
and force poor banking to the wall.
Furthermore, Senator Fletcher says
there has been big change of senti-
ment among bankers themselves in
favor of some kind of bank deposit
guarantee. He has received many let
ters from bankers, he said, who have
now come to favor such a plan, al
though they were formerly opposed
to it.
He said that he had been informed
that depositorS in banks in many places
had been Withdrawing their money and
were continuing to withdraw and then
placing it in the Postal Savings Banks.
They are doing that for Just one
reason" said Senator Fletcher. That
is because they have a Government
guarantee for return of their money
when they wish it.
Furthermore, when the Government
deposits the money received by the
Postal Savings Banks and Government
moneys in the private banks it insists
upon a guarantee that its deposits will
be paid by the banks. Why should
the Government insist that its own
deposits in private banks be guaran-
teed and then be cold to proposal
that the deposits of the ordinary cit
lzen also be guaranteed?"
New York bankers, Senator Fletcher
gave the impression, have been the
opponents of the proposal to insure
bank deposits.
Other Bank Measure.
The same influences, he said, have
been opposed to the provisions in the
Glass bill for the enforcement of those
"afhliates" of banks which do business
in securities within a period of two
years. Senator Fletcher expressed the
opinion, however, that in the end such
provision would be carried in the
bank reform bill. He said that he was
opposed to proposals advanced at the
Treasury Department that the bank re-
form bill be split into a number of
separate bills, making for example, a
separate bill out of the provisions deal
ing with the "affiliates."
Senator Wagner of New York and
Senator Bulkley Of Ohio both said that
they believed, too, that the bank reform
bill would carry in the end a pro-
vision for the insurance of deposits
The New York Senator expressed the
opinion that some such measure was
necessary to restore and to increase the
confidence of the people in the banks.
Much, he said, already has been done
along that line. But further steps
must be taken, he said. and the in
surance Of bank deposits should be one
of them.
Chairman Fletcher said that he
hoped his committee would be able to
report the so-called securities bill to
the Senate, designed to protect the in
.yesting public through fun publicity re-