CRISIS NOW GRAVE

Hokitika Guardian, 4 March 1933, Page 5

CRISIS NOW GRAVE

U.S. BANKS POSITION PREVALENT FEELING OF PANIC. (United Press Association—By Electric Telegraph—Copyright) NEW YORK, March 2. All indications increase that the country is rapidly being swept into a financial ?,nd banking crisis of grave proportions. A careful estimate of the situations indicates that, apart from unusual difficulties arising from rapid and protracted deflation and from general credit dislocations,, one important feature of the business life of the nation, namely, that of morale, is seriously endangered. A feeling of panic clearly “extends very far. It is no secret that, apart from kbreign capital holdings fleeing from the country, native sources ar© also preferring to ship tiieu- assets aoroad. There is a rise in sterling and in the' Swiss exchange by two points. This rise is considered- clearly indicative of this. There is lio gainsaying th© fact that Americans, although in a smnll number, al - o sending considerable funds abroad for safekeeping, being faced .with a hide of 732 million dollars in its volume of money in circulation and a loss of gold to the extent of 226,310 thousand dollars during the past week, which has caused a one point rise in the. Federal Reserve Bank rate,' the first rise since last -June.

The currency and gold demand is for hoarding, and the credit transfers abroad are a clear index of a native morale loss, unlike the so-called attacks upon the dollar several months ago from abroad. The currency in circulation totals 6720 million dollars. This is a record high total by nearly one billion dollars. Just how much of tbe currency went int© hiding is difficult to tell; but, whereas only .116 millions, of the gold withdrawals have been shipped abroad it is indicated that, a hundred million dollars worth of gold has been hoarded within a week. The gold reserves of the Federal Reserve Board are now only 2892 millions of dollars, representing a los« of 366,618 thousand dollars from the year’s high level, although the gold reserves are still thousand, dollar's above the figure to which they were reduced on June 15th last.

Tlie entire l gold stocks of the country still remain at 4344 million dollars.

The list of moratoria —declaring jurisdictions was increased to-day with an Arizonia bank holiday. It is interesting to note that, despite immense sums having been poured into the credit-requiring agencies of the nation, both public and private by the Reflonstruotion Finance Cor® poration the bank’s difficulties do not cease. The statement of the Reconstruction Finance Corporation to-night as of January 31st, shows that its loans to date total 1,174,980 thousands of dollars. It is plainly questioned whether such 1 a credit agency as this corporation can ever he adequate for coping with extraordinary strains upon the country’s financial system. Many distressing facts conercning public and private finance- have been published to-night. The figures of the Feneral Government’s fiscal affairs for the first eight months of the year have revealed a deficit of 1360 millions ,qf,, dollars, with an increase of 133 million dollars in the public debts during February, and of '2890 million dollars for the past twelve months, the total debt now being 20,934 million. - It was announced to-night, also, that the Strauss Company, the largest real ©state, mortgage and bond flotation house; in America has consented to the appointment of a receiver. Although this house has been known to be in difficulties fo some some past, its stoppage marks the end of the career, at least in its present form of a concern in which wealth in every state in the Union, and possibly fifty million dollars worth of bonds now . held by -the public are involved. j President Hoover, consulted with Senator Glass to-day, ostensibly seeking the latter’s view of a limited Governmental guarantee for bank de-posits,-and, perhaps, the feasibility of a domestic debt moratorium. There is a strong impression—atlhough it is believed Senator Glass considers this step to he unconstitutional —that Mr Roosevelt, President-elect who doubtless will confer with Mr Hoover on baning matters, may 7 try to force through some form of a deposit guarantee.

The banking situation was the chief topic of interest among the members of both Houses of Congress to-day. Senator-elect McAdoo, former Secretary of tlio Treasury, warmly advocated the temporarily closing of the New York stock exchange.

Telegrams and letters from various parts of. the country have continued to flood the Congressional offices, asking for some form of corrective bank legislation. The fate of the Glass Bank Reform Bill is still undetermined. The deflation issue has not yet been definitely determim'd. While it is opposed by many influential personages, there is some feeling that an increase of the r.ots issue, under careful management, jr,iy he. decided upon when the, new Administration takes over. President-elect Roosevelt arrived at Washington to-night for his inauguration. It is understood that financial matters will be his principal concern to-morrow.

In the meantime, the inquiry into the activities of the National City Bank was continued to-day. It was disclosed that on an important stock flotation of an aviation company, close friends of this hank’s executives alone were permitted t 0 participate with a resultant handsome profit. It was disclosed that moneys loaned to the Nitrate Company bv the bank were used to maintain the marketprice of the stocks, and tlmt ''oye profits were made by banks affiliated on various stock flotations. The'Federal Internal Revenue Bureau annour :od to-day that it has begun an investigation into the legality of ov-bank ebainuan Mitchell's in-come-tax transfers.