Evening star., 1935-12-23
ACTS TO PREVENT
Too MANY BANKS
A. B. A. Committee Sounds
Misunderstanding Is
Author of ForeWord.
BY EDWARD c. STONE,


ing is author of a foreword to a re-
port by the Economic Policy Commits
sion of the association aimed at the
prevention of "overbanked" conditions
in the United States in the future.
THE commissions study gives an
impressive revelation of how great
part mistaken public policies in the
chartering of banks played in Gre
ating the unsound banking structure
which finally collapsed with the bank
holiday in March, 1888" Mr.. Fleming
says. "Overproduction of banks, lit
orally by thousands, over many years
in the face of inSistent warnings not
only from bankers and others who
recognized the danger, but even more
SO from the mounting records of bank
failures themselves, is here clearly
shown to have constituted as whole
one of the greatest single economic
errors in the history of the Nation.
He points out that although the
drastic elimination of thousands OF
banks has largely corrected the old
situation. this is not a guaranty
against a repetition of the error" He
refers to fears of a recurrence OF over
banking recently expressed by Federal
banking authorities, to the powers
given the Federal Deposit Insurance
Corp. by the provision of the banking
act of 1885 over the admission OF banks
to membership in the insurance fund,
to strengthened State laws and to the
fOtlnUpH
national and State supervisory author
tties aimed to safeguard the Nation
against a return of overbanking, and
adds:
But sound laws and conscientious
officials are not of themselves always
SUFFICIENT safeguard in any field OF our
complex national life unless they have
the active support of public opinion.
It is the purpose of the American
Bankers Association to aid in mar
shalling public opinion in support ol
both national and State supervisory
authorities in their efforts to strengthen
and protect the banking structure.
Would Protect Small Banks.
Existing sound banks. especially the
small banks in the rural districts which
are serving their communities we'll,
should be protected from any return
of the overbanked local conditions
caused in the past by lax charterlng
policies, which we're mainly to blame
for the unfavorable record as set forth
In this study" the commission says.
"An inquiry among State bank COM
missioners shows a preponderant
opinion against increasing materially
the number of banks, coupled with
the fact that present laws give them
sufficient discretion to prevent rep
etition of the grave errors OF the past
However, under prevailing ab-
normal conditions, with the Federal
Government extensively exercising
loaning powers in competition with
the banks, and with industry itself sc
largely supplied with funds as to rem
der it to a great degree independent
of normal bank borrowing, the bank
ing structure, even with its present re-
duced numbers, finds it difficult to
support its existing capital investment
and operating personnel.
These are new factors, intensity
ing the need for highly prudent and
restrictive chartering policies" the
report adds.
The commission reiterated desire
previously expressed at association
meetings, that the Federal Govern
ment retire from the banking busi-
ness as rapidly as the return of nor
NAL business conditions warrant"
Higher Stock Prices Seen.
Purchases of stocks on the last trad
ing day before Christmas have shown
profit at some time in January in sc
of the last 38 years, the United Busl-
ness Service points out in its current
report. The Dow-Jones industrial
average. which goes back to 1897, has
risen during the last week in Decem-
Der in all but of the last 38 years
In 80 years the December low points
were not broken in January. In "a
years the January high was above the
December top.
The two chief causes for this tradl-
tional post-Christmas upturn IN Sc
curity quotations are probably the
seasonal peak in corporate disburse-
rnentS and the tendency for sentiment
to improve at the turn of the year
The January concentration of dividend
and interest payments, as well as bond
maturities and redemptions, provides
much new money" for investment
There is also the reinvestment of funds
following the December tax sales
which causes a greater demand fol
securities.
Dividend payments next month
should record a substantial gain over
last January. This factor, together
with a general feeling of optimism, re-
garding 1886 prospects, should bring
about another good January market
the service forecasts.
Pay Tribute to w. w. Hoxton.
Quite a number Of Washington
bankers attended the burial of Will
liam W. HoXton, chairman of the
board. and agent of the Federal Re-
serve Bank of Richmond, which took
place in Alexandria yesterday after
noon. He was a brilliant man, able
Federal Reserve official and a clost
personal friend Of many Capital finan'
ciers. who had known him ever since
the Federal Reserve system was estab
Gshed.
His death occurred last Thursda!
night in his home at Richmond
Seated in the living room, he haG
been playing with two little pet dog
and was just starting to read news
paper when he passed away almos
instantly. 1t was said today that hi
father died in just the same way.
John H. Hanna. president Of th'
Capital Transit Co., was among thos'
at the burial services. He is direc
tor in the Federal Reserve Bank o
Richmond William j. Waller Of tn
Hamilton National Bank was also il
the gathering which included a yer,
large delegation from Richmond.
Heard in Financial District.
Directors of the Life Insurance &C