The Waterbury Democrat., 1934-10-24

Washington, Oct 24.-As members of the American Bankers association gather to hear the president here tonight the chief questions uppermost in their minds are:-
 1. IS THERE TO BE IN. FLATION THIS WINTER?
 2. IS THERE TO BE A CENTRAL BANK?
 The two are einterdependent. If there is a Central Bank there is sure to be imitation. Probably without a Central Bank there will be no imitation.
 And whether or not the presi- dent attempts to reply to their questions, the real fact is that the bankers thenselves-far bet ter than Roosevelt-can give the answers.
 For the key to the future ifs. cal policy of the Roosevelt ad- nlinistratiOn lies in the future policy of the bankers.
 In the past that policy was considered by those around the White House as anything but friendly. The bankers were listed as out to wreck the New Deal. And as the past sum- mer wore on, and Young Henry Morgenthau faced the problem of refinancing $f,250,000.000 of Liberty Bonds this month, the atmosphere became tense and acrimonious.
 BANKERS STRIKE
 Beyond any question of doubt. the big bankers were on strike.
 "You think your credit Is lim- itless," one frank Boston banker informed a New Dealer. 'But it isn't. You're going to find that you've reached the end of your rope"
 More or less the same view was expressed to Young Thomas Jefferson Coolidge, undersecre- tary of the treasury, when he talked the bankers into exchang- ing his Liberty Bonds for two year notes at 21a per cent or ten to twelve year bonds at 3A per cent.
 They didn't like the trade. And in the end they served a virtual ultimatum that although they would play ball on this piece of refinancing, 1t would be the last. Their vaults, they said, already buldged with gov-l crnmcnt securities. They conn Prised seventy per cent of bank holdings.
 And what the bankers par ticularly emphasized was the fear that these gilt-edged govern ment securities, purchased at 100 and 1Oi, might be knocked into a cooked hat by imitation. If they dropped, say to S5 or 93, the banks would be left with only just as much to pay on their deposits.
 BONDS RAID
 So the government warned the bankers, would have to stop borrowing and spending.
 And tc punctuate this warming and show that they meant busi- ness, raids were started on gov ernment bonds. Home Owners Loan Bonds were raideds then Farm Credit Bonds, and so on, down the line. They were all taken over the jumps.
 The big bankers drive was not aimed solely ut government securities. 1t was also support ed by Big Business dctcrmina- ton to force n showdown with the New Deal regarding the regulation of business.
 And the governments anti pathy for the bankers, in turn, was not motivated solely by the latters' drive against government securities. Treasury officials and the White House were also sore at the way the banks had curtailed credit to private indus- try.
 with little loosening of credit, they argued, business could really get back on its feet. there would be a modest but steadily increasing boom.
 The result was some secret re- search by Dr Jacob Viner and the Treasury Brain Trust. From this grew the idea of the Cen tral Bank.
 FISCAL IRONY
 In other words, the bankers themselves were chiefly, respon- sible for. nurturing the idea which they, more than anything else, hate.
 The idea behind the Central Bank-still supposedly secret Is relatively simple. It has as its chief motive the fact htat the government needs money. There fore 1t calls in the s2.s00.000.0Oo Oo