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WHY MORE DEFLATION?
Since unrestricted opening after the banking holidays Old Kent bank sent to Chicago $65,500 gold, $229,500 gold certificates and currency, total of $1,561,500 which has been redeposited in the federal reserve bank. These figures present striking picture of confidence the institution and in the restored banking structure the Similar pictures from other sources. The newly organized National Bank of Detroit at the close of business Thursday total in commercial deposits of $25,310,356. Federal reserve banks reported Friday total of $3,236,766,000 reserves more than than when the banking holiday proclaimed. Only $14,228,000 of the money issued meet crisis had been called for while bank depositors had returned more than With such figures as these evidence the government continuing policy ruthless credit deflation? quite evident that supposed lack of confidence which prompted such strict regulations those now in force has been sufficiently dispelled to justify loosening of policy order permit freer more extensive expansion of credit? This that the government should give up the supervision and strict control that taken the nation's banking But the case for liberalization. amply supby the figures quoted, has been ably presented in the senate Senator Arthur H. Vandenberg. Although heartily accord with "an infinitely more rigid and infinitely acute on part banking government," Vandenberg holds nevertheless the deflationary policies being followed the reopening of banks are unjustified by the facts. venture the assertion." Mr. Vandenberg declared. "that there never was list of doubtful paper turned in by examiner upon which fifty cent of the items did not have stantial element of integrity and considerable percentage of the items ultimately No wonder there were very many banks which could qualify an Initial license when they had to have surplus exceeding all doubtful paper an examiner could conjure, with all his professional suspicions." Mr. Vandenberg noted that the vency of banks has been not only basis "ruthless liquidation" which entirely eliminated all doubtful paper. but also on requirement that all real estate subject mortgage foreclosures should be charged thus penalizing the bank for the to the community which it had been ex. pected the past required by law to perform, in the case of state banks. The result of this policy has been the greatest constriction of credit yet experienced, constriction far yond requirements of sound judg. ment. Values have charged off that under stretch imagination could considered losses. The results of this policy not fully predictable. the consequences of this extreme are broadly hinted analysis of the administration's financial policy by Jay writes the Detroit News:
What the Roosevelt administraRFC large adopt forthwith property followed consequent both and abroad, everybody happy leave anemic and rise from its ashes, prove the in
The latter consequence. of course, is not hoped even by of the And need not be if sensible relinquishment of pressure is exercised. relinquishment that is fully justified by the demonstration everywhere that the people of the nation willing and ready support and place their confidence in banking The realization needed today that the panic over, the storm clouds passed away and it's time to get out in the open again.
