ROOSEVELT’S REMEDIES

Greymouth Evening Star, 10 March 1933, Page 7

ROOSEVELT’S REMEDIES

FOR BANKING CRISIS CONGRESS APPROVAL [BY CABLE—PRESS ASSN. —COPYRIGHT.]

WASHINGTON, March 8. America would appear definitely to have embarked on a policy of at least “mild” currency inflation. Another day’s conferences between the President and his advisers has revealed various plans. The issuance of scrip has been abandoned. Instead some 2.800,000,000 dollars in Federal Reserve Bank notes, that are not to be redeemable in gold, will be issued. This means extending almost to the limit the 40 per cent, gold coverage for notes that is provided by law, with indications this percentage might be reduced later, if necessary. To-night, President Roosevelt held

a final conference with the Congressional leaders, and he outlined the policies which he will present to Congress to-morrow. These policies, according to the best information, consist of the following. Firstly: The legislation necessary

for the new currency issue. Secondly: The granting to the President of dictatorial powers in regard to the banking situation until permanent legislation is passed. Thirdly: Powers for the

President to invoke such economies as are necessary to balance tjie I< ederal Budget. There is every indication that Congress will promptly agree to the President’s requests. It is being commented everywhere that the crisis, coming on his inauguration day, has been a boon io Mr Roosevelt. There is an overwhelming public reaction to tho seriousness of the situation, which has so added to

his prestige that he can now easily effect adjustments in the nation’s banking and financial structure that otherAvise would require a protracted fight ,in Congress and then, not unlikely, ending in defeat. Close observers interpret the abandonment of the scrip plan as a significant move below the surface, but, nevertheless, it is pointed that there is a conflict between the large banks, and notably, the New Ysrk group, and President Roosevelt ove~ the gold standard, also over inflation and other questions which, even before the bank crisis, had loomed as major issues for the new Administration.

During the post war years the money power has gradually been absorbed by the New York bankers. They have wished to issue scrip against their assets, which are relatively sound. They appear, however, to be willing to allow the exterior banking institutions to fare as best they can. Thus President Roosevelt’s decision

to print the new money is definitely a rebuff to them, at the behest of an evergrowing demand from Western agricultural sections for “easy money,” or for an inflation policy. Nevertheless, despite President Roosevelt’s desire to make the benefits of the new currency as nationally uniform as possible, he has indicated clearly that he is aware of the realities of the situation, and that he would not keep irretrievably-weak banks bolstered up at the expense of perpetuating insolvency. In a conference with Governor Ritchie, of Maryland, to-day, the President admitted the plight of the small banks that are without the necessary securities, and admitted they will benefit to a large extent by the new issue currency, but he said that their problems “must be merged into the necessity for nation readjustments.” The Democratic leaders have esti mated that Congress -would require about three days to pass the emergency legislation, and would then adjourn for several weeks to allow time for the formulation of general bank law revisions. Meantime it is believed that President Roosevelt, by a proclamation, will extend the bank holiday for at least a few days, and will continue the strictest control of gold, which, he still insists, will remain the basis of the currency. The bankers report that considerable gold is returning in deposits. If this movement continues, it is calculated to ease the situation. The first definite adverse reaction to Air Woodin’s regulations, developed when New York bankers objected to receiving deposits for new accounts, which must be segrated and kept in cash or Government bonds, so as to be available for unrestricted withdrawal. The bankers complained that this worked to the advantage of boarders and penalised those leaving their money in the banks, and that it, furthermore, made the limited payments also provided for in Air Woodin’s regulations unfeasible.

PRESIDENT’S STATEMENT.

WASHINGTON, Alarch 8

President Roosevelt predicted an immediate resumption of banking activities throughout the United States as the result of the enactment of an Emergency Bill, the speedy passage of which is pledged to him by the Congressional leaders. President Roosevelt, in a statement, said: “I have been in conference ■with members of the Senate and the House. I have talked over with them measures which have been carefully studied and prepared, which will immediately relieve the situation, and will at once start banking operations throughout the entire country.” LATER.

‘To review at this time, the causes of the failure of our banking system is unnecessary,” said Mr. Roosevelt, in a five hundred words message. “Sufficient to say, the Government has been compelled to tsep in for the protection of depositors and tho business of the nation. Our first task is to re-open all the sound banks. This is an essential preliminary to the subsequent legislation directed against speculation with funds of depositors, and other violations of the position of trust. In order that the first objective, the opening of the banks for the resumption of business, may be accomplished, 1 ask for Congress the immediate enactment of legislation to give- to the executive branch of the Government, control over the banks for the protection of depositors, authority forthwith to open such banks as have already been ascertained to be in a sound position, and other banks as rapidly as possible, and authority to reorganise and re-open such banks as may be found to require reorganisation, to put them on a sound basis. I ask for amend-

meats to the Federal Reserve Act to provide for such additional currency, adequately secured, as may become necessary to issue to meet all demands for currency, and al. the same time, achieve this end without increasing tho unsecured indebtedness of the Government of the United States.”

WAR ON MONEY BARONS.

WASHINGTON, March 9

From New York, Mr Winthrop W. Aldrich, the President of the Chase National Bank, which is the largest Commercial Bank in the world, and in which the Rockefellers are heavy stockholders, has issued a. sensational statement, advocating sweeping bank--1 ing reforms, calculated to reduce the ; present overlords of the New York money market to a position of rela- ' tive impotence. He has suggested the complete divorcement of the commercial and the investment phases of ; banking, which is a direct thrust at the J. P. Morgan firm. He would forbid private bankers to be directors of the banks of deposits. Such positions several of the Morgan partners now hold. The divorce would force all of the commercial banks into the Federal Reserve System. Mr Aldrich has also announced that his bank’s own securities affiliate, the Chase-Harris-Forbes corporation would sever its connections with the Chase Bank. Yesterday the National City Corporation, whose securities affiliate, was a storm centre in the recent Senate investigation, made a similar announcement. LATER. Mr. Winthrop© Waldrich proposed the most drastic programme of banking reform that ever emanated from Wall Street. Not only would it divorce deposit and investment banking completely, but curb severely the activities and power of leading private banking firms, notably the J. P. Morgan Company. It would forbid pri- 1 vate bankers to take deposits, or be di- ' rectors of a bank of deposits. Mera- ' bers of the Morgan firm are directors of some of the largest commercial < banks in the country and hold import- 1 ant deposits, foreign and domestic. 1 The programme involves the inclu- i sion of all commercial banks in the t Federal reserve system. Talk of a dictator for Wall Street is being heard, t Ho would be referee to adjust delicate i operations in foreign exchange trans- S actions. f

Since the beginning of the week, approximately thirty-five million dollars in gold, and gold certificates, flowed back to the Federal Reserve Bank, New York, from member banks and individual hoarders.

BILLION DOLLARS AVAILABLE.

WASHINGTON, Alarch 8. Legislation that is intended to put into circulation one billion dollars which is now in the Postal Savings system is being drawn up for submission on Thursday, if possible, to the extra session of Congress. President Roosevelt remarked: “I am gratified at the outlook.”

Senator Robinson, the Senate Leader said: “The Bill will result in the opening of a large number of banks on Friday.” The details are not reported but it is understood that they are centred upon expanded issues of Federal Reserve Bank notes, based upon Government obligations.

The Treasury has threatened to publish the names of the gold hoarders. Permission has been withdrawn from New York State to issue Statewide scrip. REAL MONEY. WASHINGTON, March 9. The currency expansion contemplated. well informed authorities state, would not result in any debasement of currency whatever, nor operate through the reduction of the gold content of the dollar. It. would not be printing press money in any sense, said one authority.

NEW RELATIONS.

WASHINGTON, March 9. (Recd. Alarch 10, 9 a.m.)

Air Roosevelt, in a message to Congress, proposed the immediate opening of all sound banks, and provisions for currency expansion during the banking reorganisation. He will request, of Congress at an early moment two other measures he

regards of immediate urgency. It is understood that these refer' to granting him power to cut Federal expenses drastically, also getting to work on a huge building programme to provide employment.

“It is my belief,” the President said,

“that this banking legislation -will not only lift immediately all unwarranted doubts and suspicions in regard to banks ■which are 100 per cent sound, but will also mark the beginning of a new relationship between the banks and the people of this country.”

LONDON PRESS OPINION.

LONDON, Alarch 8.

Comment on the American crisis is reserved pending the meeting of the New Congress. “The Financial Times” says: If the proposals cabled from New York represented those being submitted to Congress, the President has cut through the tangle, with a scheme that is sound and straight forward, though it will have its painful reactions.

CANADIAN DOLLAR VALUES.

AIONTREAL, Alarch 9

The Canadian dollar leaped upward again to-day. The French franc, on a gold basis currency, used as the criterion. in the absence of quotations for the United States dollars,' was down to 469 against Wednesday’s 472. The pound is steady at 413. The continued rise of the Canadian dollar has furnished financial experts with further evidence for the demand for dollar credits in Europe’to pay for Canadian exports. Exporters were asked for price quotations on goods in terms of the Canadian dollar formerly quoted through the medium of the pound or the American dollar.