Salt Lake Telegram | 1932-07-02 | Page 4 | New York

I- I NEW YORK By J James mes McMullin 1 Copyright McClure Newspaper Syndicate New York banks have been watch watch- irig ing ng the Chicago situation with increasing increase ing ng attention There was some apprehension hension that uneasiness might spread to o the point of or causing local withdrawals withdrawals withdrawals with with- in volume Nothing of the kind cind happened and the banks are now breathing easier Latest reports indicate indicate indi indi- cate that the situation is in hand The New York attitude toward ChIcago's Chicago's Chicago's Chi ChI- cagos cago's difficulties changed from indifference ference to concern almost overnight Long distance wires were kept sizzling hot from Saturday to Tuesday June 28 25 Two New York banks participated In n the loans that kept Dawes Dawes' Central Republic out of very hot water The Reconstruction Finance corporation also chipped in In the nick of time Bank officials here foci feel certain that there here was nothing wrong with the Central Republic except that all the depositors wanted their money at the same time Private Chicago advices to the fInancial fi financial fl- fl district intimate that Dawes' Dawes return to the banking field had somethIng something something some some- some some- thing to do with the Central Re Republics Republic's Republics Republic's publics public's troubles People out there apparently felt that his return was hastened fastened by their banks bank's emergency This was not the case Dawes Dawes' action was Inspired by personal On the other hand Dawes Dawes' presence in Chicago certainly didn't handicap the bank any when it came to getting funds in a hurr hurry Melvin Traylor's public comments on the situation drew no applause from rom New York Bankers here felt that he made things sound worse than they were A high banking official in New York Yorks s states tes that the R. R F F. C. C has had ChIcago Chicago Chicago Chi ChI- cago conditions in mind ever since it was formed It was decided early Inthe in inthe inthe the game that some of the small fr fry were not worth strenuous rescue work He expects the Chicago bank setup to be stronger with some of the weak sisters out of the way The lowering of the rediscount rate to 2 21 2 2 1 per cent by the Chicago Federal Federal Federal Fed Fed- eral Reserve bank was not entirely voluntary The federal reserve board used moral suasion There is an interesting analogy with 1929 in this situation Both the New NewYork NewYork NewYork York and Chicago Federal Reserve banks raised their rediscount rate during dur duro ing that year In in- spite of the federal reserve boards board's opposition At that time the the- board was less inclined to discourage speculation than the two largest banks A local federal reserve official made madea a direct reply to a recent question as asto asto asto to what effect the lowering of the re rediscount rediscount rediscount re- re discount rate would have in expanding expand ing the use of credit The reply was WilS None The main Idea was to help along the psychology of The uThe moneys money's here bere come and arid get it it Although the banks have been lIquidating liquidating dating loans on security collateral with considerable freedom they have been more liberal in this respect than thau b brokers Brokers have been closing out margin accounts with no reticence whatever This has led to a certain degree of friction between banking and brokerage elements