American Bankers Bow to the Inevitable

Manawatu Times, Volume LVI, Issue 7103, 11 March 1933, Page 7

American Bankers Bow to the Inevitable

Country Launched on the Stream of Inflation

President’s Immense Powers to Deal with Situation

United Press Assn.—By Electric Telegraph.—Copyright,

Received Friday, 5.30 p.m,

NEW YORK, Mar. 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 was the even greater 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 the new Banking Bill, which within ten hours from its introduction obtained the consent of both Houses, but Mr. H. Hoover himself, who had been supported for re-election by the chief banking figures of the country against President Roosevelt, approved of the measure in a statement to-night. Moreover, behind Mr. Aldrich’s statement asking for divorcement of the dotation of banking from commercial banking is seen the acceptance by the so-called priests of the conservative banking cult of the once cordially hated “progressive liberalism” in matters financial of Mr. Roosevelt.

To-night there was still the greatest uncertainty 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 to understand, but the significances are inescapable. America has 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 “easy money,” as it is being called, represents only salutary “reflation,” rescuing- the debtor classes, revivifying business and rehabilitating commodity values, which until now seemed faced with utter extinction.

If foreign observers see the drama in America as a conflict of classes om of sections, with tho largo agrarian areas in the south and west wresting control of the nation’s economic affairs from tho financial and industrial cast and north, it will perhaps be difficult to gainsay this impression.

Emergency Banking Bill Made Law POWER TO REOPEN SOUND BANKS Received Friday, 5.5 p.m. WASHINGTON, Alar. 9. President Roosevelt’s signature on Thursday night made law the Emergency Banking Bill, providing for the expansion of United States currency and empowering -him to Teopen sound banks. Air. Roosevelt signed the measure hardly more than an hour after the final formalities of Congressional approval. Tho House passed tho Bill unanimously and the Senate by 73 to 7. Tho speed at which the Bill was rushed through Congress and signed is believed to set a record.

Representative Sirovicli has prepared for introduction to Congress, a joint resolution giving the President powor 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 President Roosevelt has not already begun to do so.

“A new deal,” Mr. Roosevelt’s preelection slogan, at last has a concise l meaning to Americans as a whole. The Radical weekly magazine, “Nation,” to-night issues a news bill,” “System ends —devaluate now.” Gold Hoarders Return Metal. An interesting aspect oi the developments concerns gold. The situation, demanding that gold hoarders return the metal, resiUted in 50,000,000 dollars return thereof to the Federal Reserve system in the last two days, with the hoarders all anxious to- suppress publication of their names and the prosecution which had been threatened.

Immediately after signing the measure, President Roosevelt, the Secretary of the Treasury (Air. Woodin) and the Attorney-General (Mr. Cummings) conferred on questions of Administration.

It is understood that about four or five thousand banks will receive an immediate o.k. from tho Government as being sound institutions and open soon. The President called a conference tonight of the leaders of both parties of Congress, believed in connection with emergency action to balance the Budget, preparatory to submitting additional emergency legislation in another special message on Friday. A constitutional amendment giving Congress authority to levy a direct capital tax on decentralise wealth was proposed on Thursday in a resolution introduced in the Senate.

It is disclosed that probably 750,000,000 dollars in gold was gradually absorbed by domestic hoarders during the past two years, offering an interesting opportunity to comment upon those American financial experts who, in articles discussing the gold question, called India a “sink” for gold and blamed also French peasants for buying large Quantities of American gold coins since French gold coins iiavc not been available for putting in: stocks. Raid Against Dollar Not Feared.

America’s Huge Army of Unemployed

TWELVE MILLIONS IN JANUARY

Received Friday, 10 p.m. WASHINGTON, Mar. 9. Mr. William Greene, president of the American Federation of Labour, said on Thursday night that unemployment rose to a peak of 12,700,000 in January, and probably went higher afterwards. The increase for January over a year ago he estimated at 2,400,000. He said the bank crisis would unquestionably increase unemployment. “Business cannot recover until these unemployed go back to work by the hundreds of thousands.” Cutting Federal Expenditure BIG SUM SUGGESTED Received Friday, 10 p.m. "WASHINGTON, Mar. 9. President Eosevelt presented to Congress leaders on Thursday night a Bill calling for half a billion dollar cut in Federal expenditures, to be made

A more serious question with promulgation to-night of an indefinite continuance of the gold embargo is what position the dollar will assume on the foreign exchanges. The best opinion appears to agree with the British comment cabled from London that there will not be 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 the United States still retains immense gold stocks.

That the powers given the President under the Emergency Banking Bill are not only immense, but that this first measure of his administration already contains instrumentality for basic roform of the American banking system, which he was not expected to secure so quickly, can be seen from the provision in the measure that he will limit the re-opening of banks only to sound institutions.

Senator Long, whose amendment that the President’s powers to safeguard banks be extended to State banks was voted down, indicated not only weakness in the American banking system, but comprehension of tho vastness of the power given to the President. Senator Long cried: “Unless the State banks of Louisiana aw! included, it will be a dark day for my State.”

It seems indicated that the banks whose reserve capital is dangerously depleted will be placed in the hands of a so-called 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 fetf exceptionally broad powers very shortly. Aside from slashing economies in Governmental expenditures and rehabilitation of tho railways under a single transport management, he will also ask for the immediate appropriation of 500,000,000 dollars for Federal work relief. It is estimated that 12,500,000 persons are at present unemployed in tho .country.

largely in veterans’ appropriations and in salaries..

It is said that tho Roosevelt plan will embrace a proposed ihalf-billion dollar bond issuo to create forestry crops and to put in motion a reforestation programme, providing for the employment of half-a-million persons.

Canadian Dollar’s Stability

PREFERRED AS VALUE MEASURE IN EUROPE

UNITED STATES CURRENCY WEAKENS.

MONTREAL, March 9. The Canadian dollar leaped upward again to-day. The French franc, a gold basis currency, is used as a criterion in the absenco of quotations, and by this measure the United States dollar was down to 469 against Wednesday’s 472. The British pound is steady at 413.

Tho 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, which were formerly quoted through the medium of the British pound or American dollar.