Evening star., 1934-12-31
TRUCE MARKS NEW.
RECOVERY PHASE
Bank Peace Announcement
May Go Down in History
as Milestone.
BY FORREST H. GRAVES.
lComhridpe Associates Staff,)

TohnLoA oAh4A A<'Ss
Cambridge Associates StaffO
Future economists may well select
October "A, 1881, as one of the sig
nifcant dates in the history of the
great depression. 1t was on this date
that the truce between bankers and
the administration was publicly
acknowledged and what may be con-
sidared recovery's third phase was
officially and conspicuously launched.
Still conscious that they had been
called money changers" still ranked
by an invidious and. in many ways,
unfair comparison with their British
brethren, disturbed by numerous ru-
mors of distaSteful banking and
monetary legislation and, to an even
greater degree, distressed by SEM
official discussions concerning the
establishment of a central bank, men,
bers of the American Bankers Asso-
citation gathered in Washington for
their annual convention. DiSqulet,
however, was not the exclusive monop-
oily of the bankers. The administra-
tion had troubles, too. The drive for
recovery had slowed to haltinS am
BILE, with the Midsummer months
bringing a business recession OF more
than seasonal proportions; prices OF
United States bonds had shown a
tendency to slump, expenditures for
relief and other administration prof.
ects were still on the ascendant and
the TreaSurys recent new financing
efforts had achieved a success that
was little more than Indifferent.
Withal. the chorus of criticism from
business and financial sources was be-
coming more vocal and increasingly
acid.
Scene Stage -Managered.
This was the background for the
burying- -the-hatchet scene, but the
scene itself gave unmiStakable indica-
tions of adroit stage-managering by
the more far-sighted banking leaders
some time before. The reasoning be-
hind it was thus. Prediction reports
made it apparent that W1lly-nilly
bankers, business and administration
would have to get along together for
some time to come.
Approximately SIS per cent OF out
standing Government obligations were
held by the banks. Any impairment
of Government credit, any failure
of the recovery drive or of Govern
ment financing would eventually
force the Government into more un-
orthodox and inf1ationary methods OF
supporting its activities. Therefore,
n0nonrtn6 oftnnnnfC
by the bankers to embarrass the ad-
ministration would simply be saving
off. on the tree-side, the limb they
were all sitting on.
The big city bankers recognized
this. That pure, unadulterated love
for the administration may not haze
motivated the rank and file may be
inferred from the enthusiasm with
which several speeches attacking New
Deal policies were received during
the opening days of the convention.
Those discordant voices were hushed,
however, and the spotlight was ex-
pertly and dramatically focused upon
jackson E. Reynolds, president OF the
First National Bank of New York, as
he made the speech which introduced
President Roosevelt on the final night
of the convention. Bearing the olive
branch, he posed three very pertinent
questions regarding the need for re-
lief. the feasibility of selecting a date
for balancing the budget and the de-
STABILITY, from an international view
point, of definite stabilization OF the
dollar at the present time.
No Brow-Beating.
President Roosevelt, in his talk that
followed, scarcely touched on the
specific points which the bankers
hoped to hear discussed. On the
other hand, there was no attempt
at brow-beating and the majority
held that his remarks were CON
ciliatory in tone" That he yielded,
SO far as this occasion is concerned,
on any important policy is 1mpos-
sible to assume, but both before and
after the bankers convention there
have been increased efforts by the
administrators to encourage "prl-
vately owned agencies to take up the
slack"
This truce, like any compromise,
was hailed with hardly more than
perfunctory hosannas by either side.
There is a general feeling, none the
less, that a new working basis be-
tween Government and finance has
been formulated which augurs well for
the future. Such an assumption is
substantiated by recent business in
dices and, more particularly, by the
success of the Treasurys December
financing operations.