Evening star., 1933-11-02

require to retire more than 3 per cent
Of the preferred stock or capital note
issue In any one year.
Repayment In 23 Years.
Thus If beginning after two years.
the bank should retire per cent each
year, the entire amount would have
been repaid to the Government In %
tractive rate to the bank that needs and
can prontahly employ the capital, it is
at the same time substantially more
than the Government pays for its
money, and should not be any tax
whatever upon the taxpayer.
On such part Of the preferred stock
or capital notes as are paid within three
years from the Gate Of issuance, the
r. F. G. will make q refund Of l per
cent per annum, thereby making the
cost Of this money to the issuing bank
per cent per annum.
When the matter of issuing and
selling preferred stock and capital notes
to the r. F. C.. was first broached, a
great many banks felt that to partici-
pate in the program would be an indi-
cation Of weakness on their part, and
for that reason would not entertain the
idea. However, after considering the
matter from all angles, and upon the
direct request from the President OF the
United States that all banks participate
in the program for the common good.
am glad to say that banks Throughout
the country are cooperating in very
satisfactory manner.
Clearing houses almost everywhere
are daily indorsing the program and
recommending to their members and 20
banks that they increase their capital
funds in this manner.
The New York City Clearing House
Association was probably the first to
indorse the plan, and you may well un-
derstand that these gentlemen con-
sidered the matter in all its aspects. At
first blush they did not favor the sug
gestion, but they are now cooperating
in q very satisfactory manner. The
Chicago Clearing House Association has
indorsed the plan, and the Pittsburgh
Clearing House, claimed by many to be
largely Influenced, If not actually con-
Memphis, Dallas, Houston. Fort Worth
Buffalo, Denver, Des Moines, Indian
apolis, st. Paul, Salt Lake City, and
many, many others have telegraphed
either to the President or to me their
Endorsement and cooperation.
Makes Common More Secure. =
Many banks have felt that the issu-
ance Of preferred stock would be
against the interest Of the common
stock, and this thought should like to
dispell. Obviously it would be to the
interest Of the common stock to have
its position made more secure by an
ample capital structure. strong enough
to meet any contingency.
Money, to the average bank. Is worth
more than per cent, and therefore will
be directly profitable.
Many banks in the country have
suspended the payment Of dividends
not necessarily because of impairment
| Of their capital or reserve funds, but as
q precautionary measure. AS a matter
Of fact the controller of the currency
recommended some months ago that al
national banks either suspend or re-
duce dividends until the future was
| made more secure. With ample capita
; and even moderate earnings, these
banks can go back on dividend basis
| and the common stock that Is not nov
paying any dividends. or the dividends
upon which have been reduced, may be
put back on a normal dividend basis.
rear Uccl ChplCooCo LII SOAie
quarters that the Government would
endeavor to dictate the management ol
banks, and this fear I wish to allay
| There Is no intention whatever on the
part of the President, the Secretary OF
| the Treasury, or the r. F. c. to assume
the responsibility Of the management Of
banks. Preferred stock will have Its
voting rights the same as common
stock, and certain protective provisions
are included to provide for banks that
get into trouble but Government part