OPENING OF BANKS

Hawke's Bay Tribune, Volume XXIII, Issue 75, 10 March 1933, Page 7

OPENING OF BANKS

CURRENCY EXPANSION

SANCTION OF CONGRESS SOUGHT.

THE PRESIDENT’S MESSAGE.

By Telegraph—Press Assn.—Copyright. (Received 10, 10.30 a.m.) Washington, March 9. Mr. 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 eaffly 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 a hundred per cent, sound; but will also mark the beginning of a new relationship between the banks and the people of this country.” “To review at this time tho causes of the failure of our banking system is unnecessary,” said President Roosevelt in a 500-word message. “It is sufficient to say that the Government has been compelled to step in for the protection of depositors and the business of the nation. ‘ ‘ Our first task is to reopen all sound banks. This is an essential preliminary to subsequent legislation directed against speculation with the funds of depositors and other violations of a position of trust. In order that the first objective—opening the banks for the resumption of business —may be accomplished, I ask for the immediate enactment by Congress of legislation giving to the executive branch of the protection of depositors, authority Government control over banks for the 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 reopen such banks as may be found to require reorganisation to put them on a sound basis. “I ask for amendments to tho Federal Reserve Act to provide for such additional currency, adequately secured, as it may become necessary to issue to meet all demands for currency and, at the same time, to achieve this end without increasing the unsecured indebtedness of the Government of the United States.” NO DEBASEMENT OF CURRENCY. (Received 10, 10.45 a.m.) Washington, March 9. The currency expansion contemplated, well informed authorities state, would not result in any debasement of the currency whatever nor operate through reduction of the gold content of the dollar. It would not be printing press money in any sense, said one authority. DRASTIC REFORM. PROPOSED BY BIG BANKER. (Received 10, 10.35 a.m.) New York, March 9. Mr. Winthrop W. Aldrich, head of the Chase National Bank, the largest in the world, proposed the most drastic programme of banking reform that has ever emanated from Wall Street. Not only would it divorce deposit and investment banking completely but it would curb severely the activities and power of the leading private banking firms, notably the J. P. Morgan company. It would forbid private bankers to take deposits or to be directors of a bank of deposit. Members of the Morgan firm are directors of somo of the largest commercial banks in the country and hold important deposits, foreign and domestic. The programme involves the inclusion of all commercial banks in the Federal Reserve system. Talk of a dictator for Wall Street Is being heard, who would be referee and adjust delicate operations and foreign exchange transactions. Since the beginning of the week approximately 35,000,000 dollars in gold and gold certificates has flowed back to the Federal Reserve Bank, New York, from member banks and individual hoarders. BILL PASSED BY HOUSE. OUTLINE OF POWERS CONFERRED (Received 10, 12.10 p.m.) Washington, March 9. The House passed the Banking Bill. The bill embodies President Roosevelt’s programme for controlled expansion of currency and the resumption of normal banking under his regulation. It would ratify the executive orders issued by the President; continue his authority over the banking situation; provide for concentration of the United States gold supply in Federal Reserve banks, penalise hoarding and provide for the controlled expansion of currency. It authorises reorganisations under careful safeguards and, for a period, the segregation of new deposits in banks of a certain class, the new deposits so segregated to bo subject to withdrawals as the comptroller may permit. The bill would permit banks to get circulating notes from the Federal Reserve System. In return for United States obligations, notes, drafts, bills of exchange and bankers’ acceptance notes would be given the banks to the full value of United States obligations and 90 per cent, of tho sound value of notes, drafts, bills of exchange and bankers’ acceptances. THE CANADIAN DOLLAR. CONTINUED RISE. (Received 10, 10.36 a.m.) Montreal, March 9. The Canadian dollar leaped upward again to-day. The French franc and j

gold basis currency were used as a criterion in the absence of quotations. The United States dollar was down to 4.69, against Wednesday’s 4.72. The pound was steady at 4.13. The continued rise of the Canadian dollar has furnished financial experts with further evidence of 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. THE CRISIS OF 1857. RECORD IN OLD LETTER. An interesting contemporary reference to conditions in the United States during an earlier period of economic crisis is contained in a letter in the possession of an Auckland resident. It was written to her father from Louisville, on August 31, 1857, and was mainly concerned with the prospects in Australia, which the writer’s friend was then personally investigating. The passage of particular interest is as follows; —“We are going to have hard times in consequence of the trouble that many of the banks are getting into and the great many failures in the East and West. lam only afraid that many of our lowa railroads will not go on or have to suspend operations for want of funds as many of the roads now in operation are on the brink of being suspended and their stock will go down to almost nothing. If money matters in the East don’t soon improve, the most solvent old Bank of Cincinnati and the branch in New York has gone, the Ohio Life and Trust Company, so if our lowa railroads don’t go on, investments there won’t pay for a long time to come.” The last sentence is incomplete, but the meaning is fairly obvious. The letter was written during one of the periods of intense activity in railway building and consequent overstimulation of industries and expectations. Owing to the failure of many American banks and firms of high standing, a commercial crisis developed in the closing months of 1857, which involved Great Britain, Germany, Austria, Prussia, Denmark and Sweden, as well as the United States.