Evening star., 1933-11-02

. JONES.
made It will probably take more time
to accomplish this task than the Presi-
dent and the depositors would like, but
there are certain physical things neces-
sary in carrying out such q program,
involving as it does the cooperation
of SO many different people and
agencies, and sometimes even court
action. You may rest assured, however
that no effort will be spared to speed
this work.
Prior to the creation of this Deposit
Liquidation Board. the r. F. c. had
already authorized loans to bank re-
ceivers and conservators aggregating
$308.000, 900 for this purpose.
While the hope has been expressed
that as much as so per cent, including
previous dividends, could be distributed
to depositors in these closed banks, 1t
is not the intention to lend more than
the reasonable liquidating value Of the
collateral held by the banks. based upon
an orderly liquidation over period Of
three to five years, reserving proper
amount to cover taxes, interest and ex-
pense of liquidation during the liquidat-
ing period, nor to limit the loans to
so per cent pay-out If the bank assets
will support a larger amount.
While the President asks that especial
attention be given to banks closed
during the year 1888, loans are being
made as a regular function Of the r. F.
c. to receivers Of banks that closed
prior to January l, 1888 Naturally q
greater part Of the iquidity in these
banks has already been distributed. but
there Is no intention of neglecting them
Oficers, directors, stockholders and
depositors of these closed banks can be
Of assistance in this great task. both
individually and through their organi-
cations. Their cooperation is earnestly
solicited. They can not only impress
upon the receivers the desirability Of
making application to the r. F. C. for
loans, but they can place before the
local committee of the Deposit Lqui-
dation Board the sentiments Of those
interested whom they represent. Unless
depositors, State bank authorities, COM
mittee members, and committee chair
men cooperate in q spirit of harmony
much valuable time will be lost in the
completion Of this very important work.
Capital Structure Better.
program and providing . sustaining
force through added working capital I'd
agriculture, business and industry.
through increased bank resources, is
being carried on by the r. F. c. pro-
gram of increasing the Nations bank
capital structure through the issuance
and sale Of preferred stock and capital
notes to the r. F. c. or to the present
stockholders of banks.
In the first place, we are going to get
back to q normal economic and social
existence. Business is going to be car
rted on in normal way, and people are
going to have work enough to provide
for their nvelihoods.
A great deal of the worlds working
capital has been lost. This applies to
agriculture, business and industry Of all
kinds and to banks.
It is the normal function Of the banks
to provide and furnish credit, and If
they are to fulfill this function, they
must place themselves In q strong po-
vulnerable against the unforeseen. but to
enable them to freely provide necessary
credit.
Recognizing that banks were no ex-
ception to the rule in those sustaining
severe losses during the past four years,
and wanting to be of assistance to
banks, and through the banks to all
those needing credit the Congress very
wisely instructed the r. F. c. to
provide added capital for them when in
the opinion Of the President and the
Secretary of the Treasury added capital
was needed.
or,,% ,,..nr, t,,oL, r,ay. fa1k %bo{
they did not need any additional capital,
but most of. them ere cooperating in
the program, and willingly following the
Presidents lead In his determined fight
to bring us back to normal existence.
Decision Up to Treasury.
To the banker who thinks he needs
no additional capital, would cite the
wording Of the law It says that when,
in the opinion Of the Secretary of the
Treasury, q bank is in need of more
capital, the r. F. C.. may, upon the
request Of the Secretary Of the Treas
ury and approval Of the President, pro-
vide the capital.
Because we are not authorized to buy
preferred stock that is subject to double
liability. and because great many
State banks cannot issue preferred
stock, the law was shaped so that
national banks should issue preferred
stock, and such State banks as above
indicated, should issue capital notes. In
practical effect they are the same: that
is, preferred stock and capital notes.
Recognizing that banks, National and
State, are privately owned, the directors
Of the r. F. c.. have endeavored to
adopt rules, regulations and formulas
with regard to preferred stock and
capital notes, consistent with sound
business policies, both from the stand
point Of the Government and the bank
stockholders. The dividend and intesest
rate Is per cent, cumulative, payable
If and as earned. After payment Of the
dividends on preferred stock, or interest
on capital notes, and after setting up
all necessary reserves to comply with
the law and to take care of losses, in
cluding the payment Of taxes, both in
come and ad valorem, 40 per cent Of the
net available shall, after two years from
date Of issuance, be used to retire the
preferred stock or capital notes, pro-
vided, however, that no bank will be
(573 :1' -