43: The Mortality Among Small Banks
Chapter 43
The Mortality Among Small Banks
The number of commercial banks in the United States stood at 29,087 on June 30, 1920. The figure stood at 15,353 on June 30, 1934. A great many of these banks had been closed or had failed, however, between June 30, 1920 and July 1, 1929, during which period about 5,000 banks, nearly all of them in agricultural communities, closed their doors and tied up deposits totaling $1,500,000,000. The average deposits per bank thus tied up was very small, being only $300,000.
44: Branch Banking versus Unit Banking
Chapter 44
Branch Banking versus Unit Banking
In view of the mortality among small banks in the decade of the 1920’s, legislation was proposed in early 1930 calling for branch banking throughout Federal Reserve districts. The present writer opposed this plan in the Chase Economic Bulletin of May 8, 1920, and was subsequently called before the House Committee on Banking and Currency, which was considering the legislation.
45: Roosevelt’s Abandonment of the Gold Standard
Chapter 45
Roosevelt’s Abandonment of the Gold Standard
We can only commend the Administration’s reopening of the banks. But the banking holiday was made the excuse for a radical change in monetary policy. In the hastily adopted Act of Congress of March 9, blanket authority was given the President to do pretty much as he saw fit regarding money and banking, including authority for the seizing of the gold and gold certificates in the hands of the people.
46: The Banking Act of 1938—Extreme Reform Bill, Not New Deal Measure
Chapter 46
The Banking Act of 1938—Extreme Reform Bill, Not New Deal Measure
The Glass Banking Bill, adopted June 16, 1933, was a reform measure designed to prevent the abuses that had developed, particularly in the relation of the banks to the securities market, in the wild period, 1924-1929. One sympathized with some of the provisions of the bill.
47: Contradictory Policies
Chapter 47
Contradictory Policies
We have seen the contradiction in the New Deal between the policy of liberal foreign trade and foreign exchange stabilization on the one hand, and the policy of internal regimentation on the other. There are further contradictions. There is a contradiction between the policy of inflation and internal currency depreciation, and the policy of foreign exchange stabilization. And there is a contradiction between the policy of inflation and the policy of internal regimentation.
48: The National Industrial Recovery Act
Chapter 48
The National Industrial Recovery Act
Certain Trade Associations Enthusiastic at First. Adam Smith remarked long ago that there was rarely a meeting of businessmen without some conspiracy against the public. In its origin the National Industrial Recovery Act may have been such a conspiracy. Businessmen wanted to restrict competition. Businessmen and their trade associations wanted to get rid of the Sherman Law.
49: The London Economic Conference, 1933
Chapter 49
The London Economic Conference, 1933
The world economic conference convened in London on June 12. Simultaneously, discussions among the Bank of England, the Bank of France, and the Federal Reserve System were taking place, looking toward a temporary, tentative exchange stabilization agreement. Rumors that an exchange stabilization agreement had been or shortly would be arrived at appeared in the press and the speculative markets reacted adversely.
50: The Strong Business Rally, March to July, 1933—Turns Downward With NRA
Chapter 50
The Strong Business Rally, March to July, 1933—Turns Downward With NRA
With the reopening of the banks in the middle of March, 1933, there came an extraordinary rally in American business. The worst had happened. Production had dropped to unprecedentedly low levels. Banks which had reopened were believed to be sound. The people were putting their money back into the banks. Inventories had fallen to absurdly low levels, and this was especially true of goods on merchants’ shelves. Hand-to-mouth buying on a great scale had prevailed.
51: More Money Magic—The Gold Buying Programme
Chapter 51
More Money Magic—The Gold Buying Programme
But the planners in Washington were far from having exhausted their repertory. There were many things yet to be tried. If one did not work, perhaps another would.
52: The Gold Reserve Act of 1934
Chapter 52
The Gold Reserve Act of 1934
Measure Forced Through With Little Discussion. The Gold Reserve Act became law on January 30, 1934. It was passed through both Houses of Congress with a minimum of discussion. The hearings before the House Committee on Banking and Currency were exceedingly brief. Those before the Senate Committee on Banking and Currency lasted from January 19 to January 23 only. There was no time for witnesses called by the Committee to make adequate study of the bill or to plan carefully prepared statements.
