Evening star., 1933-10-24
Text of Statement,

fFANhIlN -. HOOSEtEL ELL.
Text of Statement.
The statement referred to in the
above letter follows:
We began last week through the
Deposit Liquidation Board to distribute
money to depositors in banks closed
since January l. 1888. There are about
$500 Of such banks
BY making loans on the assets in
liquidation up to an amount justified
by liquidation we hope to distribute to
depositors up to a billion dollars with
the least possible delay. Where delays
occur they will be due to law suits be-
yond our control and not to lack Of
effort or readiness to help on the part
of the Federal Government.
The thawing out of frozen deposits
will put money in the hands OF
thousands who desperately need that
money to live on. and it will restore
working capital and credit to business
men and farmers all over the country.
This drive to distribute frozen deposits
is one of the major steps OF the re-
covery program. / count on the CO.
operation of every one concerned to get
this job done and done quickly.
Says Farmers Need Banks.
Now we are taking another important
step to help in the recovery of bus1-
ness and agriculture. Everybody knows
that you cannot have business or farm
ing carried on without banking sys-
tenn to serve business and farmers. We
are building up such banking system.
Ever since the bank holiday and the re-
opening under license of many thousand
banks the Government has been at work
on this. 1t has reorganized banks
through the controllers Office and the
Reconstruction Finance Corporation.
Hundreds Of banks have been put on
a stronger basis Recently the Recon-
struction Finance Corporation has urged
banks needing additional capital in Or
der that they might give credit to buSl-
ness men and farmers to secure that
capital by the sale to the Reconstruc-
ton Finance Corporation of preferred
stock. This is already being done IN
many cases. But we hope that all
banks will take advantage OF this op-
portunity to put themselves in an easy
cash position to help in the WORK OF
recovery.
repeat, banks are essential to the
recovery. A bank can operate freely
and with confidence in its future only
II it has a capital sufficient for the
volume of business that it should do and
can do as business speeds up. We need
the banks and want them to have
adequate capital. AS rule such capl-
tai cannot now easily be found in the
communities. AS recovery continues
such capital will be found. But In the
meanwhile and temporarily, but Tor sucn
length of time as may be necessary, the
Government will supply the necessary
capital through the Reconstruction
Finance Corporation in its purchase OF
preferred stock The Reconstruction
Finance Corporation will thus serve as
a recovery finance corporation.
Bank Freedom Assured.
The banks must feel free to function
well and the Government Will help
them prepare themselves to play their
important part.
There is widespread response already
from the banks to our invitation to CO.
onerate in this way in improving the
Nations banking facilities. This re-
sponse is coming from all types OF
banks-the greatest as well as the small
banks. and is coming from all parts
of the country.
To accept the Governments oHer 10
purchase preferred stock does not mean
that a bank is weak, but that II is eager
to cooperate in the recovery eHort 10
the fullest possible extent and thus un-
dertake to put this additional capital 10
work. We are not thinking OF idle CAPT.
tai. We are thinking of working capital
capital working for recovery.
While this is going on we are gettlng
ready to operate the new Federal De-
post Insurance Corporation Automat1I
tcally on January l all the national
hanks and State banks which are mem
bers of the Federal Reserve System VIII
have their deposits insured up to S2.5O0
for each depoSitOr. The State banks, OF
which there are about $500 in the
country which are not members OF the
Federal Reserve System, will have their
deposits insured in the same way II they
apply for admission to the fund and are
accepted. I hope they will all apply
Under the law, when they apply an ex'
animation must be made Of their condi-
don dc very T important thing IN strength
ening the banking structure, in which
State non-member banks play SUCH an
important part.
Creates Working Capital
This opportunity is along the lines OF
giving these banks adequate working
capital. It is we'll known that the Fed
eral Government has no supervisory re-
latton with State banks not members OF
the Federal Reserve System. We are
getting our first official and general con-
tact with them since the bank holiday
through the new Federal Deposit 1nsur-
ance Corporation. We want to take ad-
vantage of this contact for the benent
of the banks and the communities they
serve by taking up with them at this
time the question of the adequacy of
their working capital. We want them
to be able to do their part, and If they
find use for more capital to do their
part well and comfortably. We should do
everything humanity possible to see that
they get it. In other words, deposit in
surance gives US the opportunity not
only to protect depositors but to make