Evening star., 1933-10-12
BANKING PROBLEM
HELD FOREMOST
Reopenings and Protection
to Depositors Stressed
by J. J. 0'Connor.

John ]. OConnor, manager OF the
finance department Of the United States
Chamber Of Commerce, told Washington
bankers at the Hay-Adams House lass
night that the reopening Of banks and
insuring safe management OF licensed
institutions are the foremost problems
in finance right now.
He declared It Of the highest impor-
tance that, through prudent reorgan..
izations and uquidations, the funds OF
depositors in closed and unlicensed
banks be made available quickly ana
to the fullest possible extent. adding
that every effort must be made to avoid
the suspension of any licensed bank.
Since the bank holidays Of March, ne
said, the expansion OF business, increase
in the production and shipment OF
goods, advance Of commodity prices, i'm
proved conditions Of employment and
wages, enhancement Of capital values,
the unfreezing Of deposits, decline IN
boarded funds, and greater confidence
in the licensed repositories, naturally
have contributed to betterment OF
banking conditions.
The rate Of recovery In prices, in
trade, and industrial operations is re-
ported to have been greater than that
experienced in any previous six-month
period. The marked improvement in
important foreign countries, antedating
that in ours, appears to have been more
gradual, but approximately equal IN
extent.
While recessions have appeared. Mr..
O'Connor asserted, more buoyancy in
the prices Of goods and Of securities Is
F: being demonstrated than some who
| realize. It Is apparent that q number
Of uncertainties are attributable to legis-
lation affecting banking. currency, and
| capital issues.
Credit Demand Limited.
Instances of the unavailability of bank
credit to support temporary borrowing
have been reported. A number of these
come from communities that possess in
adequate banking facilities. Careful ex-
animation Of the situation indicates that
| the unwillingneSs Of banks to meet
proper applications for credit is inflni-
teSimal In comparison with the hesi-
fancy or refusal Of their customers to
avail themselves of the opportunity to
| borrow, Mr.. O'Connor declared.
| credit, except their confident expecta-
ton Of profits which, from a sound
banking point Of view must be consid-
| cred uncertain in prospect, make up
most Of the complaints. Many Of these
! have little or no capital resources. On
the other hand, officers and directors of
i banks, drawn from numerous fields Of
business, report from all quarters of the
country that going banks in preference
| to buying more investment securities,
| are eager to make short-term loans to
commercial customers to aid the pro-
| duction and distribution of goods that
really move into consumption.
The great need is to develop better
basis Tor faith in credit and in cur
| rency. Business organizations are TAX
| ing the position that without the main
tenance of the integrity Of the currency,
there can be no dependable basis for the
operations OF domestic commerce and
industry.
Little serious criticism, the speaker
| continued. has been made of the recent
open market operations Of the Reserve
banks, nor Is there indication that
| emergency powers in relation to cur
rency have thus far been unWisely en-
ployed. There Is desire. however, for
better htegration Of policies affecting
| credit and more assurance of conserv-
at1ve monetary actions by the Govern
ment In efforts to restore prices and to
secure employment Of bank credit.
Insurance Changes Favored.
1t is apparent that changes should
be made In the contemplated system
Of deposit insurance in order to avoid
the disabilities that would be visited
by the law in its present form upon
banks Of unquestioned strength, while
not contributing to sound practice In
| banks OF lesser stamina.
Consideration should be given to
limiting the insurance to maximum de-
postts Of $2.500, which would cover over
( 95 per cent Of the bank depositors Oh
the country; to providing depositors
with the right Of choice between in
surance and no insurance; to requiring
/ compensatory payments by insured de-
| positors; to limiting the assessments
upon banks to insured deposits only,
| and to other methods of overcoming
the weaknesses Of the present plan, If
we are to retain at all the so-called in
surance method Of protecting deposits.
There Is need Of increasing the pro-
duction and consumption Of capital
goods. The lack Of effective demanc
| for such goods, while due in part to
monetary uncertainties, Is also greatly
Influenced by difficulties in the capital
| market. Those in turn are ascribed
In large measure to the unwillingness
OF issuers, underwriters, dealers, ac-
countants, and even investors, to 70
forward under the requirements and
liabilities Of the recently enacted Fed
eral securities act. Mr.. O'Connor said.
IJnham Reviews 1qss R.ukin~ At
Cyril B. Upham Of the Brookings In
stitute reviewed the main features of
the banking act Of 1888 most compre-
hensively. He discussed the insurance
Of bank deposits and advocated the
adoption Of policy of realism with
regard to branch banking" He also
brought up host Of interesting ques-
tions which Mr. O'Connor discussed
later as the forum feature of the
meeting.
Rev. A. A. Stockdale, pastor of the
First Congregational Church, made an
inspiring address, in which he declared
that bankers should have many other
interests in life which at times will
take them completely away from their
regular work. They can do far better
work If they have outside diversions,
he said.
Norman E. Towson, chairman of the
Forum Committee Of the American In
stitute Of Banking, presided. The at
tendance Of Washington Chapter mem
berS was the largest in several years.