Evening star., 1934-12-17
CAPITAL INTEREST
RATES UNCHANGED
Reductions Effective Here
in Advance of Federal
Reserve Order.
BY EDWARD C. STONE.


Interest rates paid by Washington
banks on time and savings deposits
will remain unchanged as rates SINH
lar to those prescribed by the Federal
Reserve Board have been in effect
here for several months.
These rates were adopted by all
the banks in the Capital by order
of the Washington Clearing House
Association. after long and careful
study of the interest situation here.
The Federal Reserve Board has
ordered reduction from 8 per cent to
2Ia per cent in the maximum in
terest that member banks can pay
on time and savings deposits to their
customers after February l, next.
They apply to all the member banks
in the United States which have
not yet adopted them.
The Federal Deposit Insurance Corp.
has ordered a similar reduction by
the banks which are under its juris-
diction. That means host of State
banks and will bring about $4,000
institutions under the ruling.
National Results Watched.
Washington bankers expressed deep
interest today in the national results
which the new move is hoped to bring
about. The Reserve Board states
that the ordered reduction is in line
with the general downward trend in
interest rates, adding that lower rates
lonncitnrc tn cppk
investment for their idle funds"
The Reserve Board hopes that saw
ings bank depositors will place part OF
their funds in bonds, mortgages and
other securities which will give higher
Yields. The move is also expected to
bring a decline in the cost of bank
loans.
The Reserve Board was given the
responsibility by the banking act OF
1888 to limit by regulation the rate OF
interest paid by member banks on
time deposits, raising or lowering rates
in accordance with prevailing eco
nomic conditions and the require
ments of public interest. Payment OF
interest en- demand deposits by Fed
eral Reserve members was prohibited
by the banking act.
Since the board was vested with
the duty of regulating interest, the
maximum rate of payment has
dropped from per cent to the 21s
per cent which will go into effect
next year. A great many banks out
side of Washington already have the
2l2 per cent rate in force.
In line with the reduction OF inter-
est rates. the Atlanta Federal Reserve
Bank recently announced cut in its
rediScount charge to 212 per cent
from 8 per cent. Other Reserve banks
which have rates of per cent or so
are expected to follow suit. Although
the rediscount charge lacks signif1-
canoe at a time when member banks
are not borrowing, a low rate is
thought to have a psychological effect
on interest yields in general.
Private Enterprise Favored.
J. Howard Ardrey, deputy housing
administrator, who addressed the Dis
trict Bankers Association recently,
told members of the New York State
League of Building and Loan Asso-
Citations that this agency believes home
financing should remain in the hands
of private enterprise.
I'VE in the Federal Housing Admin
istration hope that the profitable busi-
ness of home financing will remain in
the hands of those who have so long
been the leaders in the field" Mr..
Ardrey said.
That is one Of the principal inten-
tions of the national housing act-to
strengthen and keep liquid the mort
gage market for those whose hVell-
hoods depend upon it."
Retail Trade Still Rushing.
Off1cials of Railway Express Agency
In various parts of the country report
substantial shipments to retail stores
and shops of rush orders to replenlsh
depleted lines With this pickup as
an indication, they anticipate retail
sales before Christmas should far ex-
ceed those of last year.
Chairman Crowley of F. D. I. G.
has announced his organizations pros
pective recommendations to Congress
on permanent deposit insurance. They
include: % guarantee limit OF
$4,000, (2) a fixed annual premium
as opposed to unlimited liability and
(3) the delegation of some supervisory
authority to the F. D. I. c.
Compilation of October II condi-
ton statement of national banks, re-
leased by Controller of the Currency
O'Connor, showed that deposits had
gone up sharply (almost S900,00o,000)
since June 30 Loans and discounts,
however. declined about $61 100000
Park Savings Payments Start.
As noted elsewhere in today's Star,
the grand rush started this morning
for some 5000 checks covering a
100000 payment to depositors in the
Park Savings Bank. While the bank
had $4,000 depositors, some had sew
eral accounts, which have been COM
bined. hence only 5000 checks.
Christmas seals for the benefit Of
the tuberculosis Society were placed
on sale in Washington bank lobbies
today. Special tables were furnished
official representatives and the re-
sporse appeared to be generous.
The New York Stock Exchange has
ruled that Peoples Drug Store stock
shall be ex the 100 per cent stock divi-
dend on December 81.
Busy Day on ID. c. Exchange.
Trading was active on the Wash
ington Stock Exchange today. The
largest transaction was $4,000 bond
sale in Anacostia g. Potomac R. r. IS,
at 7834. Capital Traction SIS moved at
1914, Washington Gas IS, series B, at
1O3 and Washington Railway g. Elec-
trio As at 9834.
Capital Transit stock sold at 26A,
Potomac Electric Power 51a per cent
preferred at Ills and Potomac Elec-
trio Power 6 per cent preferred at
1091z.
FEDERAL LAND BANKS