Evening star., 1933-02-13
Railroad Conditions Linked
With Demand for Federal Aid

Criticism Of banks by Atlee Pomerene
Ior failure to give as much aid to the
railroads of the country, after receiv-
Ing funds from the Reconstruction FL
nance Corporation, of which MIR. Pom
creme Is the head, has stirred a general
discussion Of rail conditions and the
most desirable use of the funds of the
Federal relief agency. It is held in
some comments that the banks have an
equal obligation to their depositors.
The United States" says the Balti-
more Evening Sun, already has a vir-
tual mortgage on countless banks, rail-
roads and other corporate enterprises,
through the Reconstruction Finance
Corporation, and through the FEDERAL
Land Banks it Is acquiring mortgages
on large and ever-increasing proper
ton OF all the farm lands in the coun-
try. II this trend is maintained, the
time Is already in sight when the
United States Treasury will be the
country's principal source of credit and
the banks will be reduced to the posi-
tion Of mere collecting and disbursing
agents" The Miami Daily News sug-
gests that apprehension rises in Wash-
1ngton lest the r. F. c., on behalf OF
the Government, should find itself own
ing a railroad or two"
2sAAs l 4oA1CAShC 10 QuOtCQ NY lllC Slll-
cago Daily News as stating that "the
minute the banks lay their hands on
any money they treat it as if it and
they we're in cold storage" That
paper offers the comment: 1.-The bank
ers are not silent under criticisms
They assert that the policy of exces-
stve hquidity Is forced upon them by
weaknesses of the banking laws, the
danger of sudden runs, and the general
feeling Of apprehension due to threats
OF imitation and the failure of Congress
to economize and balance the Federal
budget. Producers, the bankers affirm,
are not, as rule, SEEKING loans, an
those who do offer inadequate security
and have no real prospects of success
Moreover, the bankers argue, their own
pecuniary interest would lead them to
accommodate all trustworthy appli-
cants for loans, since idle cash Yields
no profit. Consumers of goods, when
advised to buy more freely, reply that
they are forced to retrench and econo-
mize, because Of the general situation,
excessive taxes and uncertainty as to
the future. Thus thes vicious circle is
complete. tPollyanna talk will not
break it, nor will the bandying of
charges and alibis. 1t could be broken
by sensible measures in Congress
measures Of economy, the balancing of
the budget and reputation of all
financial quackeries.
Nearly all the demands for direct
currency inf1ation," thinks the Akron
Beacon Journal, have their impulse in
the cold storage policy which Chairman
Pomerene defines If the big banks, as
he suggests, would proceed to exercise
the functions for which they were
created, business and industry would not
famish for want Of credit accommoda-
tiOns. And the Federal Government
would not be so likely to wind I'D in
the railway business, the terminal for
which it Is headed by the extensive
venture it is making in financing the
roads"
Speaking in defense of the banks, the
Lowell Evening Leader argues: Senator
Couzens also joined in criticism of the
banks, declaring that he has been un-
able to ascertain how commerce and
industry have been benefited by the
payment of the loans owed by the rail-
roads. Nevertheless, there Is another
side to the picture, Of course. When a
bank makes loan 1t Is lending money
owned by its depositors and is respon-
sible to the depositors for its safe re-
turn on q specified date. II the rail- |
roads have been unable to repay their |
loans, the banks naturally had to turn |
to some other source for their deposit
tors money. The r. F. G. conveniently |