U.S.A. BANKS CONTROL

Greymouth Evening Star, 11 March 1933, Page 7

U.S.A. BANKS CONTROL

PRESIDENT’S FULL POWERS

“HOLIDAY” TO END SOON

[BY cable —PRESS ASSN. —COPYRIGHT.]

WASHINGTON, March 9. President Roosevelt’s signature to

night, made law the Emergency Banking Bill. The measure is one providing an expansion of the United States currency, and empowering the President to re-open sound banks. President Roosevelt signed the measure hardly more than an hour after the final formalities. The Congressional approval of the Bill finished earlier. The House passed the Bill unanimous-

ly, and the Senate passed it by 73 votes to 7. The speed at which the Bill was rushed through Congress and signed is believed to be a record. Immediately after the signing, President Roosevelt, the Secretary to the Treasury (Mr. Woodin), and the At-torney-General Cumings) con-

ferred on questions of administration. The President called a conference tonight of the leaders of both Parties in Congress. It is believed to be in connection with emergency action to balance the budget, this being preparatory to his submitting additional emergency legislation in another special message to Congress on Friday. A constitutional amendment, giving Congress the authority to level a direct capital tax to decentralise wealth, was proposed by a Democrat, Senator Long, of Louisiana, in a resolution introduced in the Senate. President Roosevelt is extending the bank holiday indefinitely. He has prepared a proclamation continuing a gold embargo, to protect the gold reserve against foreign traders. Otherwise the new law gives the President full power to carry on almost as a dictator over the banking institutions of the country. It is understood that about foui’ or five thousand banks will receive the immediate “0.K.” from the Government as being sound institutions and will open soon. BIG BANKERS AT HEEL ?

NEW YORK, March 9.

Behind the outward drama of an extraordinarily humble Congress to-day, accepting, without quibble or remonstrance, sweeping dictation from the President for a drastic change in banking and finance, there was even a greater drama —that of the capitulation of the once strongest forces in American economic life, namely the great conservative bankers, and financiers and their general acceptance and approval of a new philosophy. This philosophy, in the simplest terms, may be indicated as important concessions to the great debtor classes of America. Not only almost universally did the press approve the new Banking Bill, which within ten hours from the introduction, obtained the consent of both Houses; but Mr. Hoover himself who had been supported for re-election by the chief banking figures of the country against Mr. Roosevelt, has approved* also of the measure in a statement to-night. Moreover, behind Mr. Aldrich’s statement asking for the divorcement of flotation banking from commercial banking, there is the cult of the once-cordially hated “Progressive Liberalism” in matters financial of Mr. Roosevelt. A “New Deal,” which was President Roosevelt’s pre-election slogan, at last has a concise meaning to the Americans as a whole. The Radical weekly magazine, “The Nation,” tonight issues a news bill saying: “The system ends I Devaluate now!”

SYSTEM TO BE REFORMED WASHINGTON, March 10. The fact that the powers given the President under the Emergency Banking Bill are not only immense, but that this is the first measure of his administration, already contains the instrumentality for the basic reform, of the American banking system, which he was not expected to secure so quickly. It can be seen from the provisions in the measure that he will limit the re-opening of banks only to the sound institutions. Senator Long, whose amendment that the President’s powers to safeguard the banks be extended to the State Banks also, was voted down, indicated not only a weakness in the American banking system, but a comprehension of the Vastness of the power that is given to the President. Senator Long cried: “Unless the State Banks of Louisiana are included, it will be a dark day for my State.” It seems to be indicated that those banks whose reserve capital is. dangerously depleted will be placed in the hands of a so-called Conservator, and will be liquidated in the interests of the depositors, and that these institutions will themselves be eliminated. It was indicated to-night that not alone on the banks will Mr. Roosevelt ask Congress for exceptionally broad powers very shortly. Aside from slashing economies in Governmental expenditures, and the rehabilitation of the railways, under a single transport management, he will also ask for an immediate appropriation of five hundred million dollars for the Federal Work Relief Agency. It is estimated that 12,500,000 persons are at present unemployed in the country.

STREAM OF INFLATION.

WASHINGTON, March 9. To-night there is still the greatest uncertainty as to whether to-morrow the banks will open, or what, the banks will do, or to what degree the general community can hope to find itself returned to that degree of financial normality it so long has desired The details of the deep changes contemplated are too vast and complex easily to effect; but their significances are inescapable. America has finally been launched upon the stream of inflation. Only time will tell whether dire warnings that are given by the “money overlords,” as the Wall Street bankers have been dubbed, that the sound money era is over, are justified; or whether the “easy money,” as it is being called, represents the only salutary way to “reflation.” rescuing the debtor classes, revivifying business. and rehabilitating commodity values, which, until now, have seemed to be faced with utter extinction.

If foreign observers see this drama in America as a conflict of classes, or of sections, with the large agrarian areas in the South and the West wresting the control of the Nation’s economic affairs from the financial and industrial East and North —it will per-

haps be difficult to gainsay. Representative Sirovich has prepared for introduction to Congress a joint resolution giving the President, the power to conscript the financial resources of virtually all of the financial institutions, including the corporations, the banks, the life insurance companies, and the railways. It is asked in some quarters whether President. Roosevelt has not already begun to do so.

HOARDERS DISGORGE

WASHINGTON, March 10.

An interesting aspect of the new developments concerns the gold situa- . tion. The demand that the gold hoarders shall return their metal has resulted in fifty million dollars worth of gold being returned to the Federal Reserve Bank system in the last two days, with the hoarders all anxious to suppress the publication of their names, and to avoid the prosecution, which has been threatened. It is disclosed that probably 750 million dollars worth of gold was gradually absorbed by the domestic hoarders during the past two years. This offers an interesting opportunity for comment upon those of the American financial experts who, in their articles discussing the gold question, called India a “Sink” for gold, and blamed, also, the French peasants for buying large quantities of American gold coins since French gold coins were not available for putting in their socks. A more serious question, with the promulgation to-night of an indefinite continuance of the gold embargo is what the position of the dollar will assume on foreign exchange. The best opinion appears to agree with British comment, cabled from London, that there will not be any serious decline in the price of the dollar against foreign currencies, and that any possible “raid” against the dollar from abroad is not. likely to meet with much success. It is stressed as significant that the United States still retains immense gold stocks.

“THE YELLOW STAIN.”

NEW YORK, March 10.

Gold was hot to-day, sizzling hot. It burned fingers, seared consciences, and stung the hoarders into sudden action by thousands all ovei’ the United States. They scurried to the banks to purge themselves of the yellow stain. The Government has decreed it will be a passport to prison. In vanity bags, steel chests, trousers pockets and armoured cars it poured in stacks of double eagles and five dollar pieces that dangled on the last Yule tide’s tree.

Fright, which drove much of it into socks and vaults, was bringing it back; fright at the prospect of ten years in prison, and ten thousand dollar fines. One estimate predicted that a billion dollars of hoarded gold would be back in a few days. It was believed that 200,000,000 dollars was restored to the Federal reserve system throughout the country this week. Everywhere, the Government had prepared a drive to punish the hoarders. The Reserves Board called for the names of all who had got gold in the past two years. Gold trinkets and bullion are being exchanged at assay offices for cash. Some even tendered gold teeth and watches. One man phoned a New York bank stating that he had seven hundred thousand dollars in gold.

RE-OPENING AUTHORISED

(Rec. March 11, 11.30 a.m.) WASHINGTON, March 10.

The United States Treasury, this afternoon, began to dispatch numerous telegrams allowing banks to reopen, but no announcement was made as to the names, locations or times. Mr. Roosevelt previously signed an executive order making possible the resumption of early banking operations in substantial volume, under close supervision of the Treasury. Under the order, the Secretary to the Treasury was given authority to issue licenses to Federal Reserve member banks, and to re-open applications for licenses to be filed with District Federal Reserve Banks. State banks, not members of the Federal Reserve will be allowed to reopen after obtaining approval from the proper State banking authorities.

VETERAN PENSIONS, (Recd. March 11, 11 a.m.) WASHINGTON, March 10. The Presidential proclamation kept the rigid restrictions clamped tightly, to-day, about the operations of the United States banks, until possibly Saturday. Mr Roosevelt has. used the power Congress has just given him by extending the holiday until a further proclamation. This means that for the time being the banks can do only what they have been doing in the last few days, enough business to prevent food shortages or keep people from going without pay. His second attack on the United States economic crisis finds Mr Roosevelt calling on Congress for authority to effect 500,000,000 dollar slash in veterans’ costs and Government salaries, and his swift developing emergency programme brings forward the proposal for 500,000,000 dollars bond issue to be used in employing approximately 500,000 men in internal improvements. The cut in veterans’ costs would amount to between three thirty million and four hundred million dollars from the present annual billion. Senators and Representatives have been deluged with telegrams of protest from veterans’ organisations. A big scrap looms but democratic leaders express confidence that the President will win out. Without doubt, the amount finally issued and put. forward as revivifying the monetary transfusion will be more than two billion dollars. The Federal Reserves System will be the agency by which it will be started on its mission of booming business. Mr Roosevelt asked Congress, to-day for authority to reduce veterans’ compensations and Government salaries to take effect immediately. Pointing to the prospective Treasury deficit this fiscal year of one billion two hundred million dollars, the President demanded emergency action for balancing the budget. * “The very stability of our Government itself is concerned,” he told Congress, and when that is concerned, the benefits of some must be subordinated to the needs of all. Permanently and totally disabled veterans would not be touched, or veterans whose disability is traceable to service origin, but the President will be given full authority to fix rates of compensation for a thousand other veterans not in these classifications, 1 but receiving allowances.

UNEMPLOYMENT INCREASE

WASHINGTON, March 9.

William Greene, President of the American Federation of Labour, said that unemployment rose to the peak of 12,700,000 in January, and probably went higher afterwards. The increase for January over a year ago was estimated at 2,400,000. He said that the bank crisis unquestionably will increase unemployment, as business cannot recover until these unemployed go back to work by hundreds of thousands.

HOLLYWOOD WAGE CUT.

(Recd. March 11, 10 a.m.)

HOLLYWOOD, March 10.

Employees in the film industry were promised- to-day, by the Motion Picture Producers Association, that their acceptance of the 25 to 50 per cent salary cut for eight weeks, will in no way serve as a precedent for the fixing of pay. The producers said that the proposed reduction was for only a short period, and was brought about by the banking emergency. Acceptance of the reduction was necessary if the studios were to remain open.

The Producers said the studios had announced that 97 per cent, of-the film stars, holding contracts, had accepted the 50 per cent, reduction. Members of five unions, however, rejected the cut.

LATEST DEVELOPMENTS. (Recd. March 11, 12.30 p.m.) WASHINGTON, March 10. Following the President’s economy message, the House Democratic leaders arranged to bind their preponderant majority in the caucus to get the Bill through by Wednesday if possible. A campaign of the silver advocates for aid to restore silver to monetary power was renewed, to-day, in the Senate by Key Pittman (Nevada) who reintroduced the two Bills he sponsored last session, and a third authorising the Government to buy two hundred and fifty million dollars worth of silver in the open market. One of the earlier bills would allow Britain to pay up to a hundred million dollars of her war debt in silver, with the maximum allowance per ounce of 45 cents. The other, for which Mr Pittman last session obtained the approval of the banking committee, would authorise the purchase of five million ounces of domestic silver monthly. Silver certificates would be issued to put silver into use as additional base for currency.

Mr Roosevelt has virtually ready for submission to Congress, a far flung unemployment plan for enlisting 500,000 idle men into civil corps, similar to the army, and placing them in camps in various parts of the country. Speaker Rainey told the newspapermen that such project would be part of the President’s proposal for five hundred million dollars bond ist sue for public works, probably to be despatched to Congress on Saturday. Mr Woodin announc d, to-day, that the twelve Federal Reserve banks would re-open on Saturday.

LONDON PRESS COMMENTS.

LONDON, March 10

Financial writers generally commend Mr Roosevelt’s plans as a first step. The “Financial News” says it is not yet known what provision the President will make for the . export of gold, or in other words, for the maintenance of the gold standard. The “Telegraph” says a fact of immediate importance is that Mr Roosevelt does not intend to travel beyond the limits of recognised financial prudence in coming to the rescue of banks.

LONDON STOCK EXCHANGE.

RUGBY, March 10.

Latest developments in the United States money crisis engaged close attention on the London stock markets. It is not expected that the New York banking facilities will be sufficiently resumed to permit exchange dealings in dollars before next week. Dealings in all other currencies proceeded normally. Business on the stock exchange was limited. Dealers are hesitant but the markets finished with a steady appearance. War loan 3 J per cent, was unaltered at £99J. Home rails and first German bonds, after early declines finished steadier. Gold mining shales registered gains. Internationals were firmer.

FRENCH NERVOUSNESS.

LONDON, March 10

A Paris message states heavy withdrawals of deposits from current accounts, shown in the latest Bank of France return, indicate a feeling of insecurity is prevailing. Not since 1931 has twelve million sterling been withdrawn in one week. This has resulted in a substantial increase in the note circulation. It may be taken as certain that in the event of a run on the

banks, the authorities will place an embargo on the export of gold long before the legal cover limit is reached.