NEW PHILOSOPHY

Hawke's Bay Tribune, Volume XXIII, Issue 76, 11 March 1933, Page 8

NEW PHILOSOPHY

BANKING REFORM IN U.S.

ACCEPTED WITHOUT DEMUR

CONCESSIONS TO DEBTORS.

New York, March 9.

Behind the outward drama of an extraordinarily humble Congress to-day, accepting without quibble or remonstrance the sweeping dictation from the President for • drastic change in Banking and finance was an even greatei drama of capitulation of the once strongest forces in American economic life—namely, the great conservative bankers and financiers—and general acceptance and approval of the 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 of the new bai king bill, which, within ten hours from its introduction, obtained the consent of liot’.i Houses, bur Mr Hoover himself, who had been supported for re-election by the chief banking figures of ihe country against Mr Roosevelt, approved of the measure in a statement tonight. Moreover, behind Mr Aldrich’s statement asking for divorcement of flotation banking from commercial banking, is seen acceptance by the socalled priests of the conservative banking cult of the once cordially hated “progressive liberalism” in matters financial of Mr Roosevelt.

To-night there is still the greatest uncertainty whether to-morrow he banks will open, or to what degree the genera] community can hope to find itself returned to that degree of financial normality that it so long has desired. Details of the deep changes contemplated are too vast and complex easily to effect, but the significances are inescapable. America hns finally been launched upon the stream of inflation, and only time will tell whether the dire warnings 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 only salutary “reflation,” rescuing the debtor classes and revivifying business and rehabilitating commodity values, which until now seemed to be faced with utter extinction. CONFLICT OF CLASSES. If foreign observers see the drama tn America as a conflict of classes, or of sections with large agrarian areas m the south and west wresting control of the nation’s economic affairs from the financial and industrial east and north, it. will perhaps be difficult to gainsay this impression.

Representative Sirovich has prepared for introduction to Congress a joint resolution giving the President, power to conscript the financial resources of virtually all financial institutions, including corporations, banks, life insurance companies and railways. It is asked in some quarters whether Mr Roosevelt has not already begun to do so. “A New Deal.” Mr Roosevelt’s pre-election slogan, at last has a concise meaning to Americans as a whole. The Radical weekly magazine, “The Nation,” to-night issues the news bill, “System Ends: Devaluate Now.” An interesting aspect of the developments concerns the goll situation. The demand that gold hoarders return metal resulted in a 50,000,000 dollars return thereof to the Federal Reserve system in the last two days, with the hoarders all anxious to suppress the publication of their names and prevent the prosecution which has been threatened. It is disclosed that probably 750,000,000 dollars in gold was gradually absorbed by domestic hoarders daring the past two years, offering an interesting opportunity to comment upon those American financial experts who, in articles discussing the gold question, called India the “sink” for gold, and blamed also the French peasants for buying large quantities of America gold coins, since French gold coins were not available for putting in socks. THE GOLD EMBARGO. The more serious question with the promulgation to-night of the indefinite continuance of the gold embargo Is what the position of the dollar will assume on tho foreign exchange. The best opinion appears to agree with the British comment cabled from London that there will not bo a serious decline in the price of the dollar against, foreign currencies, and that any possible “raid” against tho dollar from abroad is not likely to meet with much success. It is stressed as significant that tho United States still retains immense gold stocks.

The powers given the President under the Emergency Banking Bill are not

only immense but this first measure of bis administration already contains the

iiisfc'umciitality for a basic reform of tho American banking system, which ho was not expected to secure so quickly. It can be seen from the provision in the measure that ho will limit the re-open-ing of tho banks only to sound institutions.

Senator Long, whose amendment that the President’s powers to safeguard the banks bo extended to the State Banks also, was voted down, it. being indicated that there was not only a weakness in

the American banking system but a comprehension of the vastness of the power given to the President. Mr Long crieds “Unless the State banks of Louisiana are included, it will be a dark day for my State.’’ It seems indicated that banks whoso reserve capital is dangerously depleted will be placed in the hands of a socalled conservator, and liquidated in the interests of depositors, and the institutions themselves 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 500,000.000 dollars for Federal work. The relief agency estimates that there are 12,500,000 persons at present unemployed in the country. Mr William Greene, President of the American Federation of Labour, said on Thursday night that unemployment rose to its peak of 12,700,000 in January and probably went higher afterwards. The increase over January over a year ago is estimated at 2,400,000.

He said that the bank crisis unquestionably will increase unemployment. “Business cannot recover until these unemployed go back to work by the hundreds of thousands.” SOUND BANKS OPEN SOON ADDITIONAL LEGISLATION Washington, March 9. It is understood that about 4000 or 5000 banks will receive an immediate “0.K.” from the Government as sound institutions and will open soon. The President called a conference to-night of leaders of both parties of Congress, it is believed in connection with the emergency action to balance the Budget preparatory to submitting additional emergency legislation. GOLD EMBARGO CONTINUES Washington, March 9. Mr Roosevelt is extending the bank holiday indefinitely. He has prepared a proclamation continuing the gold embargo to protect the country against foreign traders. Otherwise the new lawgives the President full power to carry on almost as dictator over the banking institutions of the country.

Mr Roosevelt presented to Congress leaders on Thursday night a bill calling for a 500,000,000 dollar cut in Federal expenditures, to be made largely in veterans’ appropriations and in salaries. A member of the conference said that the Roosevelt plan will embrace the proposed 500,000,000 dollar bond issue to create forestry crops and to put in motion a reafforestation programing providing for employment for 500,000 persons