Show manifold ways in in which the banks are serving the nation handling millions of transactions daily for individuals corporations po rations and state and national governments the structure strengthened and deserving of public faith B by y FRANCIS MARION LAW president preside n t american bankers banker association I 1 r THE HE banks of the nation provide the r A machinery through which piss pass dally daily many millions of checks and drafts aggregating hundreds of 0 millions of 0 dollars 11 1 the tha banks are arc largely financing I 1 f H ht the abo federal deral gov 1 iby eminent in its re coveley program involve ng the 1 greatest pe peace ace I 1 time expenditures I 1 ever known likewise t h 0 1 t P F st LAW banks are largely financing the current credit needs need of states counties cities public schools and other test leal subdivisions sub divisions all of which have ini tl ti to fio co with the daily affairs 0 of nil fill ot of the people I 1 each day I 1 tanks anks throughout the coun i try are making hundreds ol of thousands I 1 0 of new loans and they are renewing and extending old loans tor for the accod i mod mo atlon dation of 0 a vast number cumber ot of b borrow botrow ers era these borrowers being ind individuals i corporations and partnerships and their loans being incident to agrical agri cul ture industry and trade in every corni I 1 in the land i the banks through their trust dej apartments part ments are continuing the work which they have faithfully carried on 1 throughout the depression and are pro trust funds placed in their care bagal against nat the worst shrinkage of v values sines ever known included in this aati activity vity Is I 1 the service the banks are performing I 1 la in connection with administering the affairs of widows and orphans the banks through the medium of i their savings and thrift deposit departments are furnishing safety tor for the accumulations of many millions of people and on this class of deposits reasonable interest Is paid banks are providing a service tor for the safe deposit dep bialt and safekeeping safe bate keeping of the possessions papers and securities of a very large number of people the officers of banks are and unselfishly giving advice and counsel to the people ct cf their communities thereby to a considerable extent gulding guiding their dally daily financial and fiscal affairs during this roost most difficult period of disturbance t i tit banking structure strengthened the banking structure as it Is today has been greatly strengthened and the process of strengthening still goes on banking Is not a closed science the banking system which we have bad was not good enough andi and I 1 earnestly believe that an able and nonpartisan non partisan commission should be set up to make a study of our numerous banking laws to the end that a properly correlated banking system might be worked out and submitted for consideration to the next congress A good system would include rigid requirements as to management intelligent tell igent and impartial supervision and in due time unification of supervision such a system composed of banks adequately capitalized capably managed and conscientiously supervised would eliminate any possibility of a recurrence of what has happened in the past tour four years the temporary federal deposit insurance plan under which deposits in banks up tip to 2500 tor for each account are insured has been in effect for six months mid lad has proven a potent factor in restoring confidence only two small banks out of over fourteen thousand holding membership la in the fund hive have failed ailed during this six months period the temporary plan has been extended very wisely tor for a year and the amount of the insured deposit has been increased to thus insuring in full over 98 in number of the depositors la in the count rys banks hoarded money Is returning to the banka and deposits are showing a vast increase banks everywhere are super liquid meaning that they have an unusually heavy proportion of their deposits in cash there are two kinds of unemployment in this country unemployment of men and unemployment of dollars these men and these dollars must be put to work banks in strong and highly liquid condition are prepared and determined to do their proper part in putting money to work requisites for or grants of bank credit I 1 that brings me to the all important question of the granting of credit by banks banka two things are necessary to increase bank credit lat the banks must be liquid and confident in their own strength 2nd and business men roust must further lay their fears and regain confide confidence uce to the point where they will dare to think and plan ahead the first requisite Is accomplished the second Is in process bank credits will increase and money will go to work as soon as business men get over their disinclination to borrow and this will be when they begin to see profits within their reach in past depressions the real movement of the expansion in bank credit has always come after general business recovery got under way and not before the number of good goo d credit risks Is increasing dally daily not in my time have good borrowers been so warmly welcome acome at baalis as hey are today nev er before has baa there been such competition tor for good loans nor has the th in terest rate ever been so low every sound business in the country today can get what money it needs I 1 A return of normal lending ni banks ure are badly needing loans for or revenue purposes purples and now that confidence in banks lias has been largely restored they are arc naturally returning to a more cormal lending policy before the bank holiday the confidence of the people was shattered the thought uppermost in the minds of 0 depositors was the safety of their funds withdrawals from banks became increasingly be heavy avy and general under such circumstances the banker mindful of his primary responsibility to ills hla depositors was more concerned in the collection ot of loans than in the making of new loans the result was a severe contraction of credit for this the banker should not bo be blamed ile he simply performed 11 ed III his a maul test rest du duty t Y bankers at this time are very properly viewing the credit needs of business with serious and sympathetic consideration applicants lor for loans are not always familiar with the rules governing bank credit and constructive and interested help on the part of the banker will bring about the making of many additional loans without doing violence to auy any principle of good banking certainly no one would advocate tile the making of unsound loni by banks the creation of 0 a large volume of 0 unsound loans would not only weaken the banks it would prolong the depression and wipe wilie out some of 0 the gains already made it Is to be ea earnestly hoped that no banker will yield under the pres sure of 0 bis big desire tor for earnings or tor for any other reason and make loans of the wrong sort john ottley of atlanta in a recent address said the plan ol of lending freely and hoping tor foi the best has never proven wise there are many needs tor for credit ol of kinds which are not within the province of commercial banks to meet likewise there are many types ot of credit but there are also many types of credit facilities cili ties a available va flab le en enough ough it would seem to meet the requirements of all classes of worthy borrowers the duty ot of every canker banker it Is clearly the duty of every banker in the country to perform certain services the most important are 1 to afford perfect safety tor for deposits 2 to grant credit to those who deserve it in the matter of credits the public must in fairness remember that commercial banks are not lending their own money but the money of their depositors po represented very largely by the earnings and savings of the people the I 1 leople eople v ft ho own these deposits have accumulated them through years of labor and sacrifice and in many cases the deposit represents their all these depositors have the right to call tor for their money at any time or at most on short notice deposits constitute a sacred trust there are certain basic principles in sound banking that must be held on onto to even in this period of change but the progressive banker must be responsive to changing conditions and he must be active in seeking proper opportunities to meet the sound needs of his customers in a recent message to congress the president preside rit sald said 1 I am greatly hoping that repeated promises that private investment and private initiative to relieve the government in the dimmed immediate I 1 ate future of much of the burden which it ft has assumed will be ba fulfilled repeated assurance has been given by the administration that there is no do desire on its part to continue government lending a moment longer than Is necessary and that nt at the earliest possible time the government will gladly give way to the banks and other lending institutions this of course Is as it should be and we are all earnestly looking forward to the time when private initiative and enterprise shall have recovered its vitality sufficiently to throw government crutches away numerous bank failures have created in the minds of many a grossly exaggerated ag idea as to tho the losses of depositors po lu in closed banks the record indicates that depositors in banks banha which closed in the past pact three years yeara will realize on an average about gac on the dollar that would mean a loss of 35 25 it has been estimated that during the depression the average value of at investments in stocks lost about 80 lo 10 bonds similarly declined approximately GO 60 and commodities gr GC deposits in sound baulis banks continued to be worth 1000 70 throughout the depression and 90 of the bank deposits ot of the country were not affected bankers deserve confidence the country can have full confidence in the integrity and competence of the aba bankers of the country out of the lessons ot of the last few years has come experience that will be valuable to the banker and to tits his community ile he can call be counted on oil to show a proper appreciation ot of tits bis responsibilities and obligations ligat ions lons end and to take lake his place among those who ho are making earnest and unselfish ecott to promote recovery lie he is not infallible but with every power that lies within him I 1 believe he may be depended upon to fulfill his duty as a custodian of the peoples money r a dispenser of 0 credit and as a 0 tearing fearing american citizen imbued sincere regard for the common |