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HOOVER APPROVES BANK LAW CHANGES Greater Protection to Depositors Urged by President in Recent Address. BY c. B. UPHAM. The influence of the administration was definitely and positively placed behind current proposals for changes in the banking laws of the country in the speech of President Hoover Monday night before the Indiana Republican Editorial Association. "It is obvious," the President declared, "that the Federal Reserve System was inadequate to prevent a large diversion of capital and bank deposits from commercial and industrial business into wasteful speculation and stock promotion." The banking system must be organized, the President continued. to give greater protection to depositors against failures. Added significance was given this statement by the announcement on the same day by the Federal Reserve Board that during the first five months of 1931 some 516 banks have suspended. This number does not include the fatalities among outlying banks around Chicago since the first of June, accompanying and following the taking over of the Foreman-State National Bank by the First National Bank of Chicago. There was much comment at the time when, in February, 1930, the controller of the currency, testifying before the House Banking and Currency Committee, declared that if bank failures continued at the pace set during the first two months of the year, 1930 would have over a thousand such suspensions. The actual number was 1,345. The present year seems to be well on the way to equaling the 1930 record, with over 500 having succumbed during the first five months of the year. It is significant that 405, or 80 per cent of the bank; that failed during this period were not members of the Federal Reserve System. Proposals for greater depositor protection in the banks of the country, described as necessary by the President, are likely to center around amendment to the Federal Reserve act. The bank failure record of reecnt years, with heaviest losses among the small country banks, would seem to lend color of validity to the contention of Controller Pole that branch banking by strong banks in the commercial centers throughout their trade areas is one method of giving greater protection to depositors. Loop bankers in Chicago were positive last week that had branch banks been permitted in outlying districts of that city, the banking situation would not have developed as it did. The positive tone of the President's address is being interpreted by both bankers and "legislators as indicating that the executive branch of the Government will be behind legislation at the next session of Congress to reduce the number of bank failures and to prevent a diversion of credit from business to speculation. (Congright 1031)
