Evening star., 1935-07-07
BUSINESS PLEASED
BY NEW ATTITUDE
ON CAPITOL HILL
Vote on Power Bill Spurs
Belief That Roosevelt
Prestige Wanes.
WALL STREET Halls
CHANGED BANK BILL
Proposal to Allow Dealings in
Securities Again Termed
Unwise by Speare.
BY CHARLES F. SPEARE.


tered on Washington, with much sat-
isfaction coming to 1t from the activi-
ties in Congress.
The vote on the public utility hold
ing company bill has encouraged it in
the belief that the prestige OF Presi-
dent Roosevelt with his constituency
Is waning and that it will be more
difficult henceforth to push through
his New Deal policies. Congress has
shown q commendable balance in dis
posing Of the extreme and non essen
tial features of the holding company
bill and keeping intact those parts OF
it that will compel the restraint and
regulation demanded of the power and
light industry. For there are few who
will dispute that these are required and
will be sufficiently administered under
the direction Of the Securities Com
mission.
The other incident that pleased Wall
Street was the adoption by the Senate
Banking and Currency Committee of
banking bill which eliminates num-
Der of the Objectionable features Of
the administration measure and adds
provision permitting the banks to
re-enter the field of underwriting Sc
curities.
Security Provision Scored.
In the Senate bill, bipartisan Or
ganization of the Federal Reserve
Board is effected. the term Of office of
its members is heightened and their
salaries increased. This is all in the
interest of a wiser and less political
operation of the system. On the other
hand. the grant of power to the banks
to engage in the business Of buying
and selling securities. even with the
limitations set-up, Is unwise.
Much of the trouble in which the
banks found themselves between 1881
and 1888 was due to their neglect of
ordinary banking operations prior to
1880 and their efforts to increase their
earnings in the markets for securi-
ties. Their depositors suffered with
them. both directly. as purchasers OF
securities and as creditors when the
crash came.
1t is argued that the stagnation in
the market for capital issues Is due
to the inability Of the banks to en-
gage in the underwriting Of securities
and so broaden the distribution of
them.
This may be true. 1t is. however,
more important that banking be con-
Quoted as 1t was originally meant to
be and that the equity of the de-
positor be preserved than that greater
scope be afforded for the wholesaling
of corporation or municipal issues.
There are now sufficient agencies in
existence for this sort of business.
Seek Outlet for Funds.
Naturally, the banks wish to find an
outlet for the great sums Of idle money
which they have accumulated and
which grows from month to month.
The call Of the supervisory agencies
for a statement of condition as of
June 80 has been followed by the pub
lication of remarkable figures by banks
and trust companies throughout the
country. Concentration of banking
resources in New York City continues.
The showing of banks elsewhere re-
fleets the same condition. An analysis
Of the reports of 10 institutions in New
York indicates that they held, at the
end Of June, $1,000 100000 of Gov
ernment securities and $2,318 ,0O0, 900
in cash. AS their total deposits were
about SO, 400 ,000, 900, the proportion Of
liquid assets to deposits was nearly 70
per cent.
One of the banks had cash and Gov
ernment obligations sufficient to have
paid of the national debt as it stood
in 1915. The notion that the banks
are reaching the limit Of their pur-
chases of Treasury paper is certainly
not sustained in their most recent
statements.
If the two branches of Congress can
reach an agreement on the public
utility and banking bills, as sanctioned
by the House in the former and by
the Senate in the latter, but cutting
out the underwriting privilege in the
Glass report, sufficient progress toward
improvement in both directions will
have been made to satisfy those who
are chiefly concerned in accomplish
ing the greatest good for the greatest
number in both situations. Neither
could be permitted to 60 on in the old
way.
Wrecked by High Finance"
The bankruptcy proceedings an
nounced this week BY the Chicago &
Northwestern and the Chicago, Mil
waukee, st. Paul and Pacific Railways
add about 10000 miles to those
already affected by the forces of the
depression, and of competition, and
by the. operations of adventures in
the field of steam transportation.
In the Southwest, high finance"
wrecked the Missouri Pacific, the
Frisco and the Rock Island. Ever
since the Goulds controlled the Mis-
souri, Pacific and its Western connec-
tions and the Yoakum interests domi-
mated the Frisco, there has been a
succession of speculative exploits in
them whose sequel has been receiver
ships and great sacrifice of invest
ment capital. The crops were not to
blame
In the Northwest, railroad manage
ment has been more respectable than
in the Southwest. The present
troubles there are due to natural
causes and are not mixed up with
stock and bond juggling proceedings.
Nevertheless, they are serious and will
compel some painful operations on
both capital structures before cure
can be effected.
(Copyright, 1885. By the North American
Newspaper Alliance !nso