AMERICAN AFFAIRS.

Otago Witness, Issue 4048, 13 October 1931, Page 28

AMERICAN AFFAIRS.

MORE BANKS CLOSED. DUE TO HEAVY WITHDRAWALS. NEW YORK, October 6. As a result of continued heavy withdrawals, the number of banks closed throughout the country was increased today with the closure of two in Philadelphia, four in Washington (Pennsylvania), one at Williams Port (Maryland), one at Spartanburg (South Carolina), and one at Canto (Ohio). The closing of two of the Pennsylvania firms followed the suicide of a director who was attached to both hanks. BIG FAILURES INEVITABLE. VANCOUVER, October 6. For the first eight months of last year America’s world trade amounted to £520.0(X),000, and for the same period of this year it fell to £330,000,000. There is now a whisper that several of the largest American bankers are inextricably involved in the German collapse and that before Wall street recovers big failures are inevitable. NEW YORK, October 8. A Philadelphia message says that the Girard Avenue Trust Company, with resources of over 4,300,000 dollars, tdosed to-day. The bank’s president stated: “We are one more victim of the hysteria which is sweeping the country.” At Ocean City (New Jersey) the First National Bank, the oldest banking firm in that district, closed following the suicide of the firm’s president. ECONOMIC RECOVERY. NEW CREDIT ORGANISATION. WASHINGTON, October 6. At a conference with Congressional chiefs, President Hoover proposed as a step towards economic recovery the formation of a new credit organisation to draw out frozen assets, broaden the facilities of the Federal Farm Loan Board, and liberalise the rediscount provisions of the Federal system. It is stated that there was general agreement on all the points, on which legislation will eventually be necessary. Democratic Senators and representatives expressed their willingness to go along with the President's proposals.

Suggestions for extending the moratorium on intergovernmental obligations were briefly touched upon, but it was made clear that a moratorium extension could not receive serious consideration until the President discussed it with M. Laval, the Prime Minister of France. Included in the President's proposal is the creation of a 500,000,000-dollar corporation by private bankers to take up the frozen paper of insolvent banks and other institutions, and to give elasticity to the credit situation. The President said that if it was necessary he would recommend the creation of a finance corporation of similar character and purposes to the War Finance Corporation, with funds sufficient for any legitimate call in support of credit.

THE PRESIDENT INTERVIEWED. WASHINGTON, October 7.

After the conference President Hoover made a statement in which ho outlined a group of proposals offered generally for the improvement of the business situation and specifically in the hope of counteracting “ the foolish alarm of certain sec tions of people in the United States, which is accompanied by wholly unjustifiable withdrawals of currency from the banks.” The President asserted that “ our difficulty is diffusion of -our resources, and our primary need is to mobilise them.” He proposed a definite programme, which bankers and Congressmen agreed to support, in which the principal items were to strengthen the Federal farm loan system by placing more money at its disposal, and to set up a privately financed corporation with a revolving fund of 500,000,000 dollars, this fund to be furnished by banks outside the Federal reserve system with the purpose of rediscounting banking assets, which were now ineligible for rediscount at the reserve banks, or, if this measure is in adequate, to establish a Federal body for the purpose of extending loans to industry. PRESIDENT'S PLAN APPROVED. NEW YORK, October 7. The American Bankers’ Association at Atlantic City voted approval of President Hoover’s plan for a 500,000,000 dollar bankers’ pool to mobilise the nation’s frozen credit. MORTGAGE DISCOUNT BANK. WASHINGTON, October 7. A proposal for a central mortgage discount bank was discussed to-day at Mr Hoover’s conference with the bankers and real estate men, who were called to consider means for providing the home builder with better credit facilities. PROPOSAL ACTED ON QUICKLY. WASHINGTON, October 8. President Hoover was informed to-day by the governor of the Federal Reserve Bank of Now York that the proposed 500.000,000 dollars'credit corporation was expected to be incorporated within 48 hours.

HOOVER MORATORIUM. EXTENSION SUGGESTED. NEW YORK, October 7. The Atlantic City Bankers’ Association on the Hoover Moratorium and the International Relations Association respectfully suggested to the Government “ consideration of the undertaking of negotiations immediately towards accomplishing an extension of the moratorium until such a time as seems necessary to allow suflicient recovery from the present conditions to warrant the belief that adjusted payments can be resumed, and that p: vious to the maturity of the moratorium the capacity to pay of the nations concerned be reconsidered.” WASHINGTON, October 8. The Hoover moratorium, launched last June under sunny auspices with universal acclaim, is running into thickening weather, as the President is prepared to discuss it late this month with the French Premier, M. Laval. While no doubt Congress will ratify the one-year debt holi day already proclaimed, the question of extension for two or three years is quite another matter. President Hoover is under increasing pressure for such a renewal. Much of the agitation centres in the New York banking group on which the President may count for support in his new prosperity credits programme. Renewal is also looked upon as impera five in some higher administration quarters. On the other hand a plain notice has been served on the President that he will find difficulty in Congress if be agrees to an extension if not coupled with a definite European agreement to scale down armaments. That may be hard to get. REDISCOUNT RATE RAISED. FIRST INCREASE SINCE 1929. WASHINGTON, October 8. The Federal Reserve Bank announced that the rediscount-rate to-morrow will be raised to 2J per cent. Other chief developments in the financial situation to-day were a brisk rally in stocks, bonds, and commodities, which observers stated indicated a nation-wide buying wave and improved confidence. For the first time since the summer of 1929 the Federal reserve rediscount rate for any district has been increase 1 with the announcement that the New York rate tomorrow will be raised 1 per cent to 21. Too easy money is said to have defeated its own purpose, rather than aided business, through an abundance of capital. It is now expected that other district rates will also go up.

A SHIPPING MERGER. TWELVE LINES AFFECTED. NEW YORK, October S. The New York Tribune Herald announces that at a meeting at San Francisco to-day steps were taken to merge the Mercantile Marine, Roosevelt Dollar, and the Chapman and Dawson Shipping interests, bringing under one head 12 American and foreign lines operating on the Atlantic and Pacific coasts of the United States to various parts of the world. The combine will own or control a Meet of ISI vessels, of almost 1,500,000 tons. OKLAHOMA OIL. THOUSANDS OF WELLS REOPENING. WASHINGTON, October 9. A message from Oklahoma City states that the Governor (Mr Murray)" lias repealed the decree and the oil wells will reopen to-morrow. Oil, however, is selling at only from 40 to 70 cents a barrel. Oklahoma oilmen were rapidly losing the market to other fields, thus inducing the Governor to end the suspension. In August last Governor Murray, of Oklahoma, and Governor Sterling, of Texas, enforced decrees closing thousands of oil wells owing to over-produc-tion and the low price.