Evening star., 1933-02-07
R.E. c. BANK LOANS
SIGN OF STRENGTH
PubIiC's Interpretation of
Borrowings as Indication >
of Weakness Denied.
BY MARK SULLIVAN.

The country mas Deen QISCuIpeu
slightly, since about January 26, by
a tremor of runs on banks. AS always,
the runs are accompanied by some
boarding. Officials of the Government
feel uneasiness may be averted by ex-
planning the cause and the clrcurn-
stances.
Officers of the Reconstruction
Finance Corporation and some other
Government officials were prevented
from spending Sunday in the usual
way, by the necessity of responding to
urgent pleas from few communities.
The most conspicuous run was on the
Hibernia Bank & Trust Co. OF New
Orleans. The Reconstruction Finance
Corporation on Sunday advanced 500
100000. In Louisiana a theory was
improvised that February 4, sixteenth
anniversary of the severance of diplo-
matte relations with Germany is suffi-
ciently memorable to be called wood
row Wilson day. and to be a holiday.
Declaration of a holiday is about the
only way a State can bring about a
moratorium and close the banks. The
Louisiana banking situation is now be-
lieved to be eTectually saved.
The Cate of the beginning of the
recent tremor of runs, January 26, is
significant That !" the day on which
loans made by he Reconstruction
Finance Corporation were made public
in accordance with resolution of the
House of Representatives. Immediately
some depositors in some banks record
ed as having borrowed from the r. F.
c. began Withdrawals. In the cases
of many banks. the largest depoSitorS
live in places distant from the banks.
These, SO to speak, foreign depositors,
net sharing the local community's
knowledge Of bank, acted in spirit
OF taking no chance.
Two Forms of Ill Effect.
The i'll effect of publication has taken
two forms. Frightened depositors have
begun Withdrawals. Other banks and
institutions which could be strength
ened by borrowing hesitate to do so,
knowing that Congress will later on
bring about publicity.
The policy >of- congressional publicity
began last June. At that time the House
called for a list of loans Congress was
warned that banks appearing on the list
OF borrowers would be menaced by runs;
insurance companies on the list would
have their solvency questioned by agents
of rival companies. Apprehension of
these consequences led to an ATTEMPT
to interpret the congressional resolution
as meaning merely that the list be
given to Congress as confidential COM
municaticn. In the end, however, the
list was made public. In the same spirit
OF minimizing the effect, the June reso-
luton was interpreted as applying only
to loans made during the current three
months. This left the earlier loans
made by the r. F. c. unpublished. In
order to make these public also, Demo-
cratic Representative Edgar Howard Of
No oclT yvNtr Nr.
January 6 providing that all loans
from the beginning shall be open TO
public inspection" Objection was made
that results would happen which have
now in fact happened Democratic
Representative Steagall of Alabama,
however, said that "the funds being lent
by tae Reconstruction Finance Corpo-
ration belong to al the people and
they ere entitled to know what is being
done" The resolution passed rs to 63.
"The list was duly MADE up by
the r. F. c. for publication January
26. On the day before, in an effort
to avert the consequences which have
now happened Republican Representa-
tive c. L. Beedy of Maine protested
against the action and hoped that a
message will go out through the press
that the people should have no fear
when this list Of borrowers is pub
Hshed." The superintendent of banks
of New York State, j. A. Broderick,
wired Speaker John N. Garner and
Representative F. H. La Guardia that
I'VE consider such publicity extremely
dangerous at this time" In answer to
his protest, Mr.. La Guardia tried by
speech to assure "depcsitors that the
loans from the Reconstruction Finance
Corporation are certainly to their
benefit" A suggestion, not adopted
was made by Democratic Representa-
tive Ragon of Arkansas that Congress
should stop with merely making the
facts available to Congress and men,
bers thereof"
List Was Opened to Public.
In the end the list, in the spirit of
Mr.. Howard's resolution, was made
"open to public inspection" Newspa-
pers published it and the feared con-
sequences followed. The public, as the
New York superintendent Of banks put
1t, appears to regard such borrowings
as a signal of distress" What Govern
ment officials wish the public to know
is that the fact that a bank can borrow
from the r. F. c. is a sign of its
strength and not its weakness.
Publication of these loans has be-
come a controversial issue in Congress
between conservatives who oppose it
and progressives who insist upon it. So
far the latter have won. A moral from
the situation is suggested by a con-
servative Democrat who is an official
Of the r. F. c. When asked how soon
the country will recover from depression
he replied, with some irritation: "As
soon as the people learn to give their
confidence and support to the upbuild-