Evening star., 1933-12-23
OPENING Of ALL us.
BANKS IS PROPOSED
Representative Mcleod Has
Bill Ready to Submit
to Congress.
BY WILL P. KENNEDY.

Legislation prOVlCug 1Or Jne TeOpeL.-
ing or reorganization of all closed ma
tlonal banks has been prepared for IN
PRODUCTION in the House as soon as Con-
gress meets by Representative Clar-
ence j. Mcleod of Michigan, after
conferences with the controller of the
currency, j. F. T. O'Connor, and Act
ing Secretary Of the Treasury Henry
Morgenthau.
Representative McLeods Office said
his bill covers banks in the hands of
receivers and those in the hands Of con-
Servators. The latest Federal Reserve
Board statistics show that of both
classes there are some 1900 closed ma
tioral banks, of which 582 are "un-
licensed" which means that they are
still in the hands Of conservators, leav-
ing some 1900 which are insolvent.
Hopes to Restore Confidence.
Both Acting Secretary Morgenthau
and Controller O'Connor have prom
ised to study my bill and ascertain the
possibilities and merits of this pro-
posal," said Representative Mcleod
ment Il intend to introduce my bill
just as soon as Congress conveneS and
to urge the earliest possible conSidera-
tion Of 1t as an important step toward
restoration Of confidence among the
people.
ITO my mind" continued Mr.. Nc
Leod, "the really important factor to-
day is restoration of confidence IN
our banking structure. L feel that as
5y,
general confidence essential for full
economic recovery will flow automatic
ally. No firm foundation for national
recovery can be built without restora-
ton OF confidence in our banks.
1T is my firm conviction that there
Is an indisputable obligation of protec-
ton by the National Government to the
depositors of these banks, whose SyS-
tenn of operation comes under the sur
veilance and approval Of the National
Government. The very permission and
approval" he emphasized, of the Ma
tional Government of the use of the
word national by this Federal Govern
ment controlled group of banks correct
ly and naturally, by inference, led depos-
ltorS to understand that the National
Government itself was to such high de-
gree concerned with the operation and
welfare of these banks that their de-
posts were absolutely secured. There
has been in the minds of the public
generally an inalienable, unassignable
warranty of protection by the Federal
Government to the banks Of the
country.
Looking for Protection.
"One of the primary reasons for my
introducing this bill is that I am
afraid that Our National Government
is overlooking not only the facts have
just referred to, but that the rank and
file of the country who make up these
depositorS compose a most valuable
part Of our citizenry and are entitled
to the protection which they under
stood was promised to them by impli-
cation.
We are spending billions today, ex-
perimenting in an endeavor to restore
confidence and revive normal business.
With doubt diSpelled and minds at
ease I sincerely feel that the efforts
toward recovery will be greatly aug
mented. In this bill 1 am proposing
no gift whatsoever. I am proposing
simple loan or advance Of money Sc
cured by the most desirable asset
known to mantle earth itself as rep
resented by real estate mortgages, to-
gether with other sincere pledges OF
payment to redeem obligations.
Personally, I have sufficient conf
dence in the Nation itself to feel that
by the expiration date set up in my bill
the Federal Government will have re-
ceived full 100 per cent return on the
money SO loaned and will be the princi-
pal beneficiary of this vitality important
course of action"
Representative McLeod's bill proposes
that the Reconstruction Finance Cor
poration loan to the closed national
banks full book value Of all their frozen
assets, taking such assets as security.
He proposes that the funds thus loaned
10 closed banks be used for the pur-
pose of enabling them to reopen, or
to reorganize, and resume normal busi-
ness activities.
In order to restore and maintain
confidence, a condition Of the reopen
ing of such national banks would be
their membership in the Temporary
Federal Deposit Insurance Fund until
the permanent protection Of deposits
afforded by the Federal Deposit In
surance Corporation becomes effective.
Further Provisions.
AS a further means of maintaining
confidence, by the prevention of heavy
immediate Withdrawals of funds upon
the reopening of such national banks,
the Mcleod bill provides:
(a) No depositor shall be permitted
to withdraw more than $500 from his
account during the period accounts are
guaranteed to that extent by the
Temporary Federal Deposit Insurance
Fund
Cb) After the permanent insurance
plan becomes effective, July l, 1884, de-
post. Withdrawals shall be limited to
a maximum of $4,000 until July l,
1895, after which date no restriction
will be placed on Withdrawals.
These restrictions on deposit with
drawals would apply only to such funds
as were on deposit at the time such ma
tional banks were closed and no restr1c-
ton whatever would be placed on with
drawalS of deposits made after the re-
opening of such national banks.
The Mcleod bill further provides that
all debts represented by bank assets,
with the exception Of assets in the form
of unsecured notes, held by the Recon-
struction Finance Corporation as secur-
ity for loans to banks are to be liqui-
dated to the debtors by the Reconstruc-
ton Finance Corporation over a 10-year
period. 1t is provided that debtors shall
be allowed to make payments in easy
installments on their debts assigned to
the Reconstruction Finance Corporation
at a rate of interest not to exceed per
cent In the case of assets in the form
Of unsecured notes, the Reconstruction
Finance Corporation is to have full dis
cretion concerning terms Of liquidation
and may, when it deems such a course
advisable, insist upon such terms of
payment and such additional security
from the debtors as it may demand
without regard to the 10-year hquida-
ton period provided for other forms OF
assets.