Evening star., 1934-03-22
j. s. HELD OBLIGED
TOPAY YDEPOS|TORS
A. Mitchell Palmer Tells
Senate Body Government
Was in Control of Banks.
BY the Associated Press.

BY the Associated Press.
A. Mitchell Palmer. ATTORNEY Cen
eral in the Wilson administration, told
House Banking Subcommittee today
the Government was obligated to pay
depoSitorS in closed banks because it
had been in absolute control of
bank policies for the last several years.
Palmer said the Government also
was obligated because Of governmental
appeals made year and two years
ago to the public to stop boarding
and to leave deposits in banking in
stitutions.
He said the appeal that went out
lis sufficient reason" for passage Of
the Mcleod bill providing for govern
mental agencies to purchase remain
ing assets of closed national banks,
pay depositors in full and liquidate
the assets over l0-year period.
Palmer said that if the Government
had chosen to pay 6epositors in closed
banks at the time the national re-
covery act was passed instead of ap-
priating 300,000,000 for public
works much of the road to recovery
would now be behind US"
Attacks Treasury Policy.
John w Staggers. local attorney,
OF 70
in dealing with the Washington bank
situation before the committee and
charged that certain proffers to four
local conservators "fell little short
Of offering them a bribe."
Staggers was describing the forma-
ton of the Hamilton National Bank
out OF the prime assets Of other
banks, originally intended to be eight
in number, but later reduced to seven.
He did not mention the names Of
the constituent banks to the commit
tee. Staggers is counsel for Col
Wade H. Cooper, president of the
United States Savings Bank, which
had been slated to join the Hamilton,
but was dropped in the middle Of a
stiff court fight put up by Cooper.
Cites Promise Of Jobs.
'All of these banks had been placed
in the hands of conservators," said
StaggerS, referring to the banks which
joined the Hamilton, and in order
to assure the success of the scheme
four of the conservators were promised
by the organizers of the Hamilton
National Bank that they would be
retained in some capacity in connec-
ton with the new bank. This proffer
Of lucrative position to the con-
servators, who were then the custodianS
and trustees of the funds in the
several units proposed to be taken
over by the new bank, fell little short
of offering them a bribe to break
down any resistance they might offer
as result Of their former connections.
THE contracts for the transferring
Of the prime assets in most cases were
prepared and executed in the Treasury
Department.
I'VE therefore, find at least four of
the conServators who were acting as
trustees of the banks funds entering
into a contract with new organiza-
ton in which they expected to share
in the profits.
Seven Contracts Approved.
THE eight contracts for the trans
ferring of the assets were presented
to the Supreme Court of the District
OF Columbia for the courts approval
on September !, 1888. Seven of these
contracts were approved by the court.
THE controller had approved these
contracts in face of plans which had
been submitted which made available
at least IS per cent to the deposit
ors Immediately upon the opening of
the bank, and provided ways and
means of guaranteeing the full and
complete payment of the IS per cent
waived by> them over a period OF
time"
Staggers complained to the COM
mittee of the manner in which assets
of closed banks here were written
down, whereas ne charged that the
banks which had opened on the first
three days after the close of the
bank holiday had not been
required to do this
The Mcleod bill, Staggers said,
would release frozen bank deposits
and increase realty values not only in
this city, but throughout the country.