Evening star., 1933-04-16
PLANS TO INSURE
DEPOSITS PUSHED
Passage of Glass Measure
Expected, Despite Opposition
in Some Quarters.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, April 15-In spite OF
the opposition of banking interests to
that portion of the bill introduced into
the Senate by Senator Glass which will
insure bank deposits, it is expected that
the measure will be adopted. Dissent
from it is understood to have been
made this week to President Roosevelt
by representatives Of some of the larg-
est New York banks.
The extreme view Is that the inSur-
ance feature of the bill will seriously
handicap banking; in other words, will
reduce the profits of banking. On the
other hand, If the measure makes
permanent that portion which ellmi-
mates payment of interest on demand
deposits, the saving from this source
will compensate for a considerable por-
ton of the insurance expense.
Public Opinion Favorable.
There is no doubt that the force Of
public opinion has gone strongly in
favor of either a direct guarantee or
insurance of deposits since the bank
holiday and that, until depoSitors have
some assurance that their savings are
given maximum protection, there will
be reluctance on the part of many to
return funds still boarded.
Leonard P Ayres Of the Cleveland Trust
Co. discusses at some length the bank
ing situation and measures for reform
ing it. He points out that the simplest
means of strengthening the banking
system would be by bringing all lnstltu-
tions into the Federal Reserve. Ihls,
he says, is the best custodian for the
deposit of bank reserves. A further
advantage of unified system would be
greater uniformity of bank eXamina-
tions and closer supervision over bank
ing standards and practices.
1t is realized that at present there
Is a wide variation in the quality OF
these examinations as between those
of the Federal Reserve System, the
various State banking departments and
the local clearing house associations.
Much that has occurred in the bank
ing world in the last few years could
have been anticipated and corrected
had the annual or semi annual reviews
of banking conditions been more rigid
and less routine 1t is not too much to
say that the present strength OF the
New York clearing house banks Is due
to the close watch that their aSsocla-
ton has kept over their accounts and
the policy it long ago adopted OF pro-
hibiting member banks from making
cages.
In this connection Col Ayres states
the accepted truth when he says: Our
recent banking troubles have failed to
substantiate the widespread belief that
most banking difficulties would be found
to have their direct origins in the great
stock market speculation that termi-
mated in 1929. 1t is probably true that
instead of that being the case. the
major and more numerous difficulties
may be attributed to the shrinkage in
the values of lands and buildings, and
of mortgages. leases and bond issues
based upon them. 1t seems probable
that if an effective restraint could be
placed upon real estate speculation it
would prove in the long run to be
more valuable safeguard to the future
of American banking than would the
restriction of speculation in commodi-
ties and securities"
Loans on Real Estate.
The difficulties of banks in many of
the large cities today are primarily the
result of an overbalance of loans on
real estate. This was the fundamental
trouble in Detroit. A banker who is in
close touch with banks throughout the
country said today that except in the
large centers and in cities with popu-
lations ranging from 10000 to $4,000
there were comparatively few banks
whose depreciation in assets resulted
from decline in securities. The great
er portion were involved in loans on
local real estate or in farm mortgages.
This situation should be gradually aid
ed by the measures now in Congress to
substitute Government paper on which
interest is guaranteed for farm mort
cages and for mortgages on homes up
to specified value
(Copyright 1Q33)