Evening star., 1933-03-12

gested way out Of this predicament il
to separate the remaining quick assets
from assets that are slow and apply the
former to the immediate demands OF
depositors and represent the latter in a
preferred stock Of the particular insti-
tuition up to the amount Of the unpaid
deposit.
Public Backs Reform.
1t has taken courage on the part OF
the administration to recognize and de-
fine the distinction between the strong
and the weak banks and to present a
plan for immediate reform in the bank
ing world. It has been possible to do
this because the public is united today
In favor Of any measure that will re-
lieve conditions, even though 1t may be
contrary to its political or economic be-
liefs and to its material disadvantage
Representing this unanimity on the
part Of its constituency, Congress Is
also cooperative to greater degree
hours in fruitless debate.
After a week of restricted banking IA
cilities throughout the country there Is
now a steady approach to what. in a
few days, should be normal conditions
in the banking life of the Nation. The
early confusion over the use Of clearing
house certificates or local or State
scrip" has disappeared, and with 1t
the prospect for even greater embar-
rassment later on had this form of cur
rency been adopted. with its inevitable
premiums and discounts in different
parts of the country. In its place we
have an adequately secured currency
that will meet all demands on rela-
lively equal basis throughout the Ma
ton and achieve this end without in
creesing the unsecured Indebtedness Of
the Government of the United States" "
Price Trend Upward.
In order to preserve fully the credit
of the Government and to stop the
flight of the dollar" 1t will be neces-
sary to extend the period during which
there Is an embargo on gold. This
technically throws the country "ofi
gold" It has been pointed out that
this is no different situation than ex-
isted during the wartime emergency
when restrictions of the same kind were
imposed, and that this order does not
involve any permanent change In ouf
monetary creed. It has. however given
the infiationists some leverage. which
they have used in creating sentiment
toward higher prices for commoditiee
and for common stocks.
By one index the commodity price
average has advanced 7 points in the
last week. At the same time there
has been a sharp rise IN London IN
popular American shares. The taste
for imitation has been slowly acquired
Today many people rather like 1t ano
hope to satisfy 1t. They have already
seen its effects on the prices OF farm
products.
From a different angle, the consumer
has watched the demonstration with q
feeling of dismay. He knows that his
wages will not advance or his services
command a higher price. He has had
considerable evidence this week, in the
number Of dividends reduced or passed
that the income from his investments
is steadily shrinking and that he Will
probably be asked to make further con-
cessions to debtors.
Treasury Issue Maturing.
Along with the stabilization Of bank
ing conditions must go program OF
Government economy that will lend
itself to the support of Government
credit. which today is at discount.
The working balance of the Treasury
has been dropping rapidly. 1t is now
not much over 100,000.000. Next We'd
nesday about s7oO,00o, 900 of Treasury
notes mature. with no provision yet
made for their payment. but with the
prospect that they will be given up by
present holders in exchange for new
short term obligation at a considerably
higher rate than the maturing paper
carries.
The Government has been handicap
ped like. all others by inability to collect
from its normal sources of revenue. 1t
viii be one of the grestest benef1ciaries
Of the free passage Of bank checks ex-
pected to be in effect next week. Quite
soon. however. it must devise plan
for obtaining additional funds to meet
its appropriations and to carry on its
relief. 1t is obvious that. with a new
set-up in the banking world, the Re-
construction Finance Corporation vii
gradually fade out of the picture as 9
crutch on which crippled institutions
may continue to lean.
Trade Recovery Coming.
With the banking system of the
country ceasing to function, it wa
inevitable that business should have
suffered a serious contraction and that
4