Evening star., 1933-09-06
BANKERS REQUEST
NEW LEGISLATION
National Association Ex'
presses Opposition to Fed
eraI Guaranty of Deposits.
Nv the Associated Press.

opposition to the Federal guaranty CT
bank deposits today in resolution
asking the national administration to
create commission to draft new bank
ing legislation Immediately.
Under the act of 1888 the Govern
ment has undertaken to insure deposits
of S2,5OO or less after January /, 1894.
The resolution, sponsored by the ma
tional banking division of the associa-
tion and adopted by the full conven-
ton, pointed out that there still re-
manned time for a commission to study
the entire American banking system
and prepare legislation to supersede
the guaranty act before it became effec-
tive
I'VE recommend" it read. "to the
national administration at Washington
that it seek means for postponing the
initiation of deposit insurance which
under provisions of the banking act OF
1888 would be in operation at the be-
ginning of 1884"
President Roosevelt told the bankers
yesterday he expects them to unleash
the flow of credit and enable industry
and commerce to take the fullest ad-
vantage of the national recovery act.
II am confident you will work with
me to meet the credit needs of indus
try and trade" he said in speech read
before the convention.
Two of the administrators spokes-
men, Gov Eugene R. Black of the Fed
eral Reserve Board and Chairman Jesse
H Jones of the Reconstruction Finance
Corporation, stressed in even stronger
tones demand that banks loosen their
credits.
Cooperation Urged.
Co-operation between State and Fed
eral authorities in the authorization
of new banks and branches, the divorc-
ing of bank supervision from politics,
modification of eligibility provisions OF
the Federal Reserve act and gradual
extension of branch banking were
urged today by George " Mclaughlin,
president of the Brooklyn Trust Co.
Mclaughlin said unified banking
system under single supervision
suggested legislation to remove the
possibility of competition in laxity"
between the two sets of supervisory
uthorities-Federal and State.
The President said he understood the
courage and judgment required after
period of drastic liquidation in apprais
ing security and extending credit. He
declared the matter required immedl-
ate attention from the bankers toward
putting savings to gainful use
President Roosevelt said in his mes
sage that splendid results" had come
from the national banking act, which
provides for a guaranty of bank de-
posits of less than S2,500
A short time earlier, President Fran
els H. SiSson of the Bankers Associa-
ton had expressed an opposite view,
terming it law which largely repeats
the old mistakes on bigger scale"
Sisson objected particularly to the
bank guaranty provision of the law,
declaring guaranty laws had failed on
many previous trials in various States.
He expressed the opinion that bank
ing had brought about its own improve
ment and classed that improvement as
lone of the more important factors of
national recovery, as distinguished from
the artificial and highly debatable po-
litical measures that have commanded
the attention of the public"
Objects to Clause of Act.
In addition to the bank guaranty
Clause Sisson said he objected to pro-
visions in the act which forced banks
to give up investment activities and
which gave to the politically appoint
ed Federal Reserve Board the power
to control credit movements of member
banks.
Society sought its scapegoat for the
depression and landed with remarkable
unanimity upon the banker as the
demon responsible for all its troubles"
Sisson said in explaining what he
termed the forces responsible for bring
ing about the Federal regulations on
banks.
A high percentage of bank failures
of the past, he said, have been caused
by the policy of allowing charters for
banks of small capital in communities
not needing them, such as many vii
lsges of less than 300 population.
Circulation to Be Increased.
Black told the convention that cir
culation of new currency would be in
creased as soon as business provided
work for it.
He reviewed steps taken to decrease
cotton, wheat and pork production by
paying bounties to farmers as some of
the ways in which new currency could
be used.
Among the resolutions expected to be
Endorsed by the bankers convention
was one pledging cooperation with
President Roosevelt's program for easier
credit to continue the upswing of bus
iness
Jones asserted banks do not require
more than so per cent liquidity and
suggested that institutions tying up
assets to larger extent than that were
hoarders.
"Hoarders of available credit are lit
tie better than hoarders Of currency,
he said "By no stretch of the lmag1-
nation can a solvent bank need more
than so per cent liquidity and 40 per
cent should be aplenty.
Declared Discouraging.
Calling loans and forcing liquidation,
as some highly liquid banks have done,
and are still doing breaks mems hearts,
destroys values, often the savings OF
lifetime, and created unemployment.
Certainly there is no reason why this
policy should not now be reversed by
the tightest of the tight.
With the return of confidence and
all the credit facilities available banks
can adopt fair and helpful lending
policy without the slightest risk to their
own situations"
Jones also told the bankers they need
have no apprehension about the deposit
insurance feature of the new bank law
if the capital structure of the country
is made invulnerable, adding:
And those of you who think you are
going to get rid of deposit insurance at
the next session of Congress simply do
not know your Congress"
H O. Edmonds of Chicago was elect
ed president of the trust division, sue
ceeding r. NJ Sims Of San Francisco.
Other officers elected were Leon M.
Little of Boston, vice president; Lewis
E. Pierson OF New York. Robert Girls
void of Baltimore, C. Sumner James
OF Los Angeles, Leslie G. McDougen of
Newark, N. j.; Gwilym A. Price of
Pittsburgh and A. Holt Roudebush of
st. Louis, all members Of the Execu-