Evening star., 1934-05-28
FLEMING SPEAKS
ON BANK NEEDS
Libera1izing Securities Act
One of Topics at White
Sulphur Springs.
BY EDWARD C. STONE,
STAFF Correspondent of The Star,


WHITE SULPHUR SPRINGS, w.
Va, May 28.-Congressional LIBERAL
iZation of the securities act, banking
support of the national program of
modernization, repair and new con-
struction, and greater efforts on the
part of bankers in making loans to
customers, were urged by Robert V.
Fleming, president Riggs National
Bank and vice president of the
American Bankers Association, In
an address here today before the Dis
trict of Columbia Bankers Associa-
ton.
Mr.. Fleming spoke at the opening
session of the sixteenth annual con-
vention, other speakers being George
o. Vass, president of the District
Bankers Association; Corcoran Thorn,
president American Security g. Trust
Co.; Hilleary G. Hoskinson, vice
president Riggs National Bank, and
Earle NJ Amick of the same institu-
tion, who reported as chairman of
the associations safe deposit section.
Il feel it my duty to point out one
grave danger which exists respecting
securities and which affects the re-
turn of many of our unemployed citi-
Zens to work in the capital goods in
dustries," Mr.. Fleming said. Il refer
to the securities act, the provisions of
which, particularly in regard to civil
liabilities of officers and directors,
must be liberalized. But this alone
will not assist in the refnancing of
maturing issues or the flotation of
new issues which in all probability
should be sold in the interest of
recovery, because it must be realized
that we have never before in our
history emerged from a depression
without issuance of new securities to
supply needed capital to industry.
Corrective Steps Needed.
"The amendment of the securities
act alone (and there is bill in Con-
gress to amend it, although the pro-
visions thereof do not seem to be
entirely satisfactory is not sufficient,
for under the provisions of the bank
ing act of 1888, no member bank of
the Federal Reserve system. after
June 16, 1894, will be permitted to
engage in underwriting or selling Sc
curities, and security affiliates must
be divorced after that date; further
more, after June Is private bankers
can no longer accept deposits which,
of course, will result in the elimina-
tion of their deposit business and
leave only their capital funds, which,
in the judgment of those well quail
fled to know, are entirely inadequate
to take care of refinancing of ma
turing issues or the f1otation of new
issues. 1 am hopeful that before
the adjournment of this Congress
corrective steps will be taken in order
that the tremendous efforts which are
being made by the administration
toward national recovery shall not be
hindered by this restrictive legisla-
tion," Mr. Fleming said.
The Washington banker then
touched on the Presidents program
covering modernization. repair and
new construction, mortgage insurance.
mortgage associations and building
and loan insurance. Investigation
shows that little renoviZing and mod
ernization has been undertaken since
the crash in the stock market in
1929. There is great need that prop
erty be modernized and renowned,
thereby enhancing the value of the
properties and increasing production
in all lines and classes of materials
needed in the work.
Details of Plan Given.
Mr. Fleming outlined the plan in
detail. stating that it is a workable
one and one in which the banks will
be glad to cooperate. The plan does
not contemplate creation of another
Federal agency. This makes it all the
more important for banks to go as
far as possible in the making of
sound loans The Home Credit In
surance Corporation, to be organized
with a capital of S2O0,OOO00O, will
be prepared, upon application, to in
sure any reputable private lending
agency, such as banks and building
and loan associations, against losses
incurred through the purchase of
promissory notes given by property
owners in connection with recondi-
tioning Further details indicated
that there will be little risk attend
ant upon the hearty cooperation of
the banks in this plan.
In order to create better public
understanding of sound banking, Mr..
Fleming suggested that bankers ex-
anime every loan to see if it is in bank
able form, and if it is not, see if it
cannot be made bankable, in order
that the uses of credit may be stim-
ulated. He insisted that bankers
must bring about in the public mind
realization that they are no differ
ent from doctors, lawyers, farmers
and artisans. More humanity
among bankers" Is his slogan.
He declared the insurance of bank |
deposits up to So, 500 had been a great
benefit to banks in Washington and
throughout the country. The work of
the Reconstruction Finance Corpo-
ration in strengthening the capital
structure of banks has also done a
great deal to restore much needed
confidence. There is no evidence, he
added, the R. F. c. is trying to in
terfere with bank management.
Turning to the national securities
exchange bills, Mr.. Fleming expressed
the hope that Congress will deter
mine that the Federal Reserve Board
shall be given complete jurisdiction
over any marginal requirements which
may be prescribed with respect to
credit extensions by banks. 1t should
be pointed out, the speaker concluded,
that these marginal requirements only
pertain to equity securities, which
means stocks or bonds carrying the
privilege of conversion into stocks,
and that there are no marginal re-
qulrementS provided for in either bill,
even as regards equity securities,
where such securities are pledged as
collateral for loan, the purpose of
which is not to purchase or carry
securities.
Vass Sees Lower Interest.
George o. Vass, in his annual ad-
dress as president of the association,
predicted forced lowering of inter-