The midland journal. (Rising Sun, Md.) 1885-1947, 1934-10-19
by William Bruckal


return to Washington on Wednesday
was followed Immediately by confer
ences with Mr.. Richberg and quick
announcement of the new program. 1t
Is evident, therefore, that when the
President decided something had to be
done, he moved at once to get rid of
General johnson and to start the new
machinery through orders issued to
Mr.. Richberg.
Formulation of industrial policies
henceforth are regarded as likely to
be more on the basis of trial and error
than heretofore has been the case. +,
Of the country are apparently quite
disturbed over the
rIn0nclerS trend toward easier
Disturbed bank examinations.
Mr.. Roosevelt lately
has told the treasury that the bank
examiners were too nardboiled in going
over loans held in portfolios of banks
and that he was anxious to see more
uniform system developed than the ex-
amining methods long in use.
The fear seems to be that the bank
examiners will relax too far in grant
ing approval for loans outstanding.
Heretofore, banks have had to toe the
mark and any questionable papers or
any loan that gave evidence of not be-
ing liquidated In accordance with its
terms was promptly called to the atten-
ton of the bank management with in
structions to make corrective adjust
ments on the books. If, as some finan-
cial authorities expect, bank eXamin-
ers become too lenient it is suggested
in many quarters that the banks again
may find themselves with paper upon
which they cannot realize just as oc-
Cured at the beginning of this depres-
sion. 1t was bad loans that forced the
closing of many banks.
Then, too, many observers are find
ing it difficult to reconcile the Presi-
dents attitude with the frequent criti-
cisms he has made of banking prac-
tees heretofore employed. am re-
minded also of the singing rebukes
that have come from the senate COM
mittee on banking and currency after
it's investigation of the banking struc-
ture. Time after time that commit
tee, which proceeded with it's investi-
cation with blessing from the White
House, has attacked banks and bank
ers because Of bad loans and worse
| judgment in dealing with the borrow
ers. The question has been asked sew
eral times lately whether banks are
going to be willing to make loans that
are in some respects a gamble even
under the Presidents urge If, later,
they will be subjected to attacks in the
halls Of congress.
On the bank loans the President is
convinced that bank examiners have
been throwing out a
examiners lot of loans that are
Too Stringent perfectly good. They
have been forcing
the banks to charge off this paper as
a loss. In other words, Mr.. Roosevelt
believes that under the old rules of ex-
animation too stringent attitude was
adopted by the administrative authori-
ties in the treasury and the bank ex-
aminers carried out those rules lit
orally.
In the background, it is to be remem-
bered, however, there is the federal
deposit insurance corporation. This
agency guarantees that the depositors
will be repaid in full up to limit of
$4,000 on each account. 1t would seem
to be that the existence of this insur-
ance corporation ought to fend off any
particular fear. But bankers know
and good many of the political and
administrative leaders recognize that
the corporation could not withstand
wholesale bank failures. 1t draws it's
| funds from assessment of member
banks and, therefore, when its present
reserves are exhausted banks must dig
up more. Following this line of rea-
soning, one cannot help arriving at the
conclusion that a series of bank fail
ures, resulting from bad loans, would
throw more of a burden upon the
good banks than they can carry. Thus
it is made to appear that a high per-
centage of bankers in the country after
all are going to continue to exercise
their judgment on the type of loans
they make and will not be influenced
materially by administration wishes.
Some, of course, will extend credit
with abandon, and it is this group
of bankers who eventually will wit
ness the deposit insurance corporation
paying off their depositors.
Consumers must look to change in
their diet as regards some items of
food during the coming winter, accord
ing to statement from the Depart
ment of Agriculture. Through the bu-
reau of agricultural economics the de.
partment said that it expected some in
creases in prices between now and the
end of the year but that the climb in
price levels likely would be more grad
ual and not so large as has occurred