Evening star., 1936-10-12

t0ere was uLtle TO snow 1Or II.
The phrase keeps coming back
~and there was little to show for it."
My memory reverts to q certain night
in 1882 when certain group of banks
in Kentucky, with branches in Ten
nessee and Arkansas were on the
verge Of failure. The danger Of start
ing q fire Of bank failures that might
become Nationwide was known in
Washington and the President Of the
United States was being petitioned
by anxious people in those States to
avert 1t.
Rescue Arranged.
remember the incident vividly,
not because line about it was printed
in the newspapers at the time-for
to give publicity to such things meant
. conf1agration-but because Alex
Legge, now dead, who was head of
the Federal Farm Board. talked to
me about 1t many times. The Govern
ment put about $1oo,0o0,0o0 in the
breach to avert disaster. The method
was to lend on the farm commodities
which these banks had in their port
folio Of loans. Criticism Of the lend
ing on crops by the Farm Board was
widespread, but 1t wasn't farm policy
that caused the making of those
loans-it was q simple act Of rescue
Il don't care what they say about
the Farm Board" said Legge to me
with considerable feeling. I'm not
going to let 100 little banks 20 to
the wall" And he did prevent the
immediate crisis.
Yet, as President Roosevelt says,
there Is little to show for it."
remember another occasion in the
Winter Of 1881. The whispering was
that three States in the far South
were on the edge Of the financial
precipice. that they could hold out
no longer without Federal aid. Mem.
bers Of Congress from those States
Democratic Senators, Of course-were
1mploring the White House for aid.
And Hoover was imploring other MEM
bers Of Congress to rush his bill
through that would create the Recon-
struction Finance Corp. and give him
at least . couple billion dollars to
stem the tide Of deflation that had
set In with respect to certain large
segments OF our banking structure.
Law GrudgingIy Passed.
I remember the incident because 1t
meant q dark and gloomy Christmas
for Hoover and for a host Of other
persons who sat up in the Treasury
and elsewhere worrying about how to
get the money to help. And finally
the law was passed rather grudgingly
by the Democrats who controlled the
House and dominated the Senate. It
was stated in the cloak rooms at the
time that to give Hoover 50 ,000, ,0Oo,-
900 would surely re-elect him and that
wouldn't be very desirable from q
Democratic point Of view.
But the Reconstruction Finance
Corp. was created-its powers were not
as extensive as Hoover asked, but they
were sufficient with which to make q |
start.
My memory goes back once more |
to the Spring and Summer Of 1892. |
In Chicago, rumors about bank runs |
were growing more and more ugly. |
There was weak bank among the |
strong ones. 1t was the Dawes bank. |
If it were allowed to 60 to the wall |
all other banks would go, too. That |
was the outcry. Midnight sessions,
frantic conversations back and forth, |
everybody in the inner circles and |
many newspaper men knew the situa-
ton. Finally came the Dawes loan
not out of any fondness for any in |
dividual or for any particular group |
OF people, but to save Chicago, to save |
Illinois, to save Iowa, to save the
Middle West. II Chicago went under,
what would happen?
Chicago Saved.
Well do I remember the head OF |
one Of the largest banks, Melvin
Traylor, now dead, standing on the
streets OF Chicago exhorting thousands
Of people to 60 back home, that their |
banks were protected by the r. r. c.
and by the Federal Reserve and there |
were ample funds. He was right
the big Chicago banks were safe |
but the people didn't think so. The |
sumors had begun to seep through.
And so Chicago was saved from |
what might have been . social dis
turbance-possibly revolution - who
knows? And yet there is "little to
show for it."
Hoover didn't know how to bally- |
hoo what he was doing. He was
curiously inept when it came to self
And. of coiirse he
couldn't have boasted about it on .
Nationwide radio hook-up anyway,
for to tell the story was to risk the
danger Of more such situations being
created.
Then there came the dark and