Evening star., 1935-03-09
INSURANCE LIMIT
OF $1,000 URGED
D. c. Financiers Oppose
$4,000 Figure Named in
1885 Banking Act.
BY EDWARD C. STONE.

10 pTOGeCClOIl VI dCCOullIS uP w SC,ooo
only, thereby limiting the assessments
that can be levied to make good any
deficiencies in the insurance fund.
This phase of the banking act Of 1885
Is perhaps causing more discussion in
the financial district than any other
proposals in the bill, probably because
the insurance plan hits every banks
pursestringS so directly.
Bankers here agree that the bank
ing proposals now before Congress are
as important, if not more vital, than
any other legislation of this kind that
has come up since the passage OF the
far-reaching Federal Reserve act over
20 years ago. Local financiers are
opposed to giving the Federal Reserve
Board too much power and also are
against political domination of the
Federal Reserve System. At the
same time, the opinion is expressed
that further control over credit by
the board might be wise.
The proposed legislation, however,
is so controversial that views on many
points differ widely. A particularly
timely discussion of high lights in the
proposed banking act appears in the
National City Banks latest financial
review, which is widely circulated
among bankers here. In discussing
Title I, the bank letter says:
$4,000 Insurance Favored.
"Title I covers principally amend
ments to the Federal deposit insurance
law. including highly important
ho iy, hn YNrnyyicinnc Nf tho
manent plan relating to maximum
limits of insurable deposits and as
sessments to which bank members
of the insurance corporation would be
liable. AS the law now reads, bank
deposits after July next will be in
sured in full up to $4,000, at the
rate of rs per cent on all amounts
between that and $4,000, and at the
rate of so per cent on all amounts
over $4,000, with no limits on the
assessments that might be called for
to make good any deficiencies in the
insurance fund. Under the amend
ments now proposed, insurance would
be restricted to deposits of $4,000
maximum. and assessments would be
fixed at not more than one-twelfth of
! per cent annually of the total do
mestic deposits of bank members of
the insurance fund.
While we do not wish to give en-
dorsement to the principle of deposit
insurance, we regard the proposal to
limit insurance to deposits of no more
than $4,000 as constructive. inaSmuch
as it will limit the liability against
the insurance fund, while at the same
time covering something like SO per
cent in number of bank depositors.
The proposal to fix a limit on assess
,ments is also constructive, though
the plan to levy such assessments on
the basis Of total deposits, rather than
insured deposits, is unfair in that it
discriminates against the larger banks
which have large deposits in excess Of
$4,000 on which they would be taxed
without compensating insurance pro-
lection.
little III of the proposed Kill like
wise presents no fundamental diff
culties, being composed mainly Of
amendments sponsored by the Federal
Reserve Board and controller Of the
currency, and designed to clarity and
adjust various sections of the banking
act of 1888 in the light of experience"
the City Bank states.
Title III Is Heart of Bill.
Title constitutes the heart of the
bill, containing as it does proposals for
fundamental changes in banking con-
tral and practice. t is this section in
particular which calls for most care
full consideration. Briefly stated, the
changes proposed in this section in
clude:
Title II constitutes the heart of
the bill. containing as it does pro-
posals for fundamental changes in
banking control and practice. It is
this section in particular which calls
for most careful consideration. Briefly
stated, the changes proposed in this
section include:
Il. Limitation of the self-governing
character of the Federal Reserve
banks, and the Capitalization of the
control in the Federal Reserve Board
and the President.
"2. Broadening the eligibility re-
quirements Of the reserve banks-now
restricted to -liquidating CONNER
cial paper or member bank notes Sc
cured by United States Government
obligations-to include any sound"
assets of member banks; Federal Re-
serve notes to be secured by a first
lien on all assets Of the issuing bank.
IS. Authorization of national banks
to invest their entire capital and sur
plus In real estate loans, which, If
amortized, may be up to rs per cent
Of the value Of the property and run
for 20 years; such investments in real
estate to be in addition to the banks
own premises.
I'm so far as the vital provisions
Of Title II of this bill are concerned,
1t Is difficult to see how anything
will be gained by haste. 1t is easy to
see how much might be lost. There
can be no doubt but that the coun-
try would feel far more secure, and
the chances Of reaching wise con-
clrsions far greater, If this section of
the bill were reserved for more ex-
tended study and debate" the banks
review concludes.
Heard in Financial District.
A record attendance is expected at
the debate tonight between Washing
ton Chapter. American Institute of
Banking, and the Richmond Chapter,
in the American Security g. Trust
Building.
John w. Hanes, member of Charles
D. Barney g. Co., and governor of
the New York Stock Exchange, states
that he will not be a candidate for the
Office of president of the Exchange.
His name had been suggested by the
Nominating Committee along with
several others.
President Walter S. Clifford of the
American Telephone & Telegraph Co.
reports steady increase in new tele-
phones during the first two months
of the present year. Based on these
reports, he states that national eco
nomic conditions are improving.
DR.. Frederick D. Rossini of the
Bureau of Standards has been ap-
pointed director of the American Pc
troleum Institute Research Project 6
on the isolation and Identification of
hydrocarbons in petroleum. This pro-
ject was formerly directed by the late