Evening star., 1940-09-29

Carter Glass, the 82-year-old vet
eran legislator who is often called the
father of the Federal Reserve Sys-
tenn.
Reports on present business condi-
tions and on the outlook were also
most encouraging, although the
bankers expressed regret that bank
loans for business purposes have not
kept pace with the economic expan-
sion.
Defense Credit Held Ample.
The banks have the resources, the
trained personnel. and the knowl-
edge of their own communities,
which equip them, along with the
investment markets, to handle major
portions of the new financing which
the national preparedness program
will make necessary, Mr. Fleming
said. All banks were urged to solicit
actively and energetically every
sound loan in their localities that
has anything to do with the national
defense program.
In instances in which defense
projects are so large that local banks
might be unable to finance them in
their entirety, the smaller banks
should share in the financing along
with the large banking institutions
of the region, resolution suggested
In those instances in which lending
agencies of the Federal Government
must be called upon, the banks
should participate with those agen-
cies in the financing.
Turning to the capital markets.
the bankers expressed regret that
during the past four years there has
been a progressive decrease in the
amount of new capital raised by cor
porations through the sale of securi-
ties to private investors. The bank
ers took the view. said Mr.. Fleming,
that such decrease would be un-
fortunate in normal times for it re-
fleets contraction rather than ex-
pansion in our industrial plant. but
1t is especially undesirable under
present conditions. The defense
program, especially in it's early
stages, should be financed by private
investment funds.
Business Gaining Steadily.
Committees reported to the con-
ventlon that general business activ-
1ty has been increasing in this coun-
try since last April and so far only
a small part sof the advance has
resulted from the production of
munitions of war either for export
or for ourselves.
1t now seems probable that the
advancing trends of industrial ac-
tivity will continue for a number
OF months to come, with the two
main factors in the increases being
the growing production of the mu-
nitlons industries, including the ma
chine tool, aircraft, Shipbuilding
and heavy industries and the large
programs Of output now planned by
the automotive industries.
So far in 1910 industrial produc-
ton, rail freight transportation
and agricultural income, have been
running about 10 per cent ahead of
their records for the corresponding
months of last year.
Bond Prices Well Sustained.
Mr.. Fleming pointed to the re-
port made at Atlantic City that
during the past year there has been
q huge increase of more than $4,-
600 10000 in our gold stocks, a
somewhat larger advance in bank
deposits, and additions to bank in
vestments and bank loans that have
together amounted to not much
more than half the increases in gold
stocks. This has resulted in an in
crease in excess bank reserves
amounting to more than $2,500 ,O00,-
600.
1t is noteworthy, the convention
was told, that this great additional
increase in excess bank reserves has
not had the effect of lifting security
prices, and especially bond quo
tations. that has formerly been as
sociated with important additions
to bank reserves. 1t seems instead
to have operated to sustain bond
prices rather than to lift them.
The bankers urged restriction as
far as possible of the increases in
the national debt by more general
use of bank credit in defense flnanc-
ing and payment of larger propor-
ton of it out of current taxation than
has yet been proposed, and a smaller
part by debts which will have to
be paid in future years.
The financiers reaffirmed the posi-
ton they took in Boston against
extension of branch banking across
State lines, Mr. Fleming said. The
convention was one of the most
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