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bank deposits are not really money even on a paper, let alone a gold standard but mere money-substitutes, which serve as money ordinarily, but reveal their true identity when nationwide confi- dence begins to collapse. On the request of bankers for government to save them from the consequences of their own mistakes, state after state, beginning 4 See Jesse H. Jones and Edward Angly, Fifty Billion Dollars (New York: Macmillan, 1951), pp. 17ff. 5 Detroit had especially overexpanded during the boom, and frantic efforts by Hoover and his administration, along with Detroit industrialists and New York banks, to save the leading Detroit banks, had foundered on the devotion to pri- vate enterprise and true private responsibility of Henry Ford and of Michigan s Senator Couzens, both of whom refused to agree to subsidize unsound banking. See ibid., pp. 58 65. Also see Lawrence E. Clark, Central Banking Under the Federal Reserve System (New York: Macmillan, 1935), pp. 226ff.; Benjamin M. Anderson, Economics and the Public Welfare (New York: D. Van Nostrand, 1949), pp. 285ff. Dr. Anderson, supposedly an advocate of laissez-faire, sound money, and property right, went so far in the other direction as to chide the states for not going further in declaring bank holidays. He declared that bank moratoria should have applied to 100 percent, not just 95 percent, of bank deposits, and he also attacked the Clearing House for failing to issue large quantities of paper money during the crisis. The Close of the Hoover Term 327 with Indiana, declared moratoria and bank holidays. Governor Ritchie of Maryland declared a three-day bank holiday on Febru- ary 24. On February 27, the member banks of the Cleveland Clearing House Association decided arbitrarily to limit with- drawals from all their branches, and no state officials acted to stop this blatant infringement of property right. They were promptly followed by Akron and Indianapolis banks. On February 27, the Ohio, Pennsylvania, and Delaware legislatures authorized the state banking officials to restrict the right of withdrawal of deposits. The states adopted this procedure quickly and virtually without debate, the laws being rammed through on the old political excuse that the taxpaying and voting public must be kept in ignorance of the situation in order to prevent panic.6 In such a manner do the people s representatives characteristically treat their supposed principals. One of the ironic aspects of this situation was the fact that many national banks, which had worked hard to keep themselves in an at least relatively sound position, did not want to avail themselves of the special privilege of bank holiday, and had to be coerced into doing so. As Willis puts it: [i]n many cases, the national banks . . . had no wish to join in the holiday provisions of the localities in which they were situated. They had, in such cases, kept them- selves in position to meet all claims to which they might be subject, and they desired naturally to demonstrate to depositors and customers their ability to meet and over- come the obstacles of the time, both as a service to such customers and as an evidence of their own trustworthi- ness. There followed what was deemed . . . the necessity or desirability of coercing . . . the sound banks of the community into acceptation of the standard thought 6 See H. Parker Willis, A Crisis in American Banking, in Willis and John M. Chapman, eds., The Banking Situation (New York: Columbia University Press, 1934), pp. 9ff. The holiday laws either (a) forbade banks to redeem the funds of depositors, or (b) permitted the banks to choose the proportion of claims that they would pay, or (c) designated the proportion of claims the depositors might redeem. 328 America s Great Depression essential for the less liquid and less well-managed insti- tutions.7 By March 4, every state in the Union had declared a bank hol- iday, and the stage was set for President Roosevelt s dramatic and illegal closing of all the banks. The stage was set, by the way, with the full collaboration of the outgoing administration; in late Feb- ruary, Congress, with the acquiescence of President Hoover, passed a law permitting national banks to cooperate with state bank holidays. And the Comptroller of the Currency obligingly issued a proposed draft of a uniform bank holiday act to aid the various state legislatures in drafting their bills. President Roosevelt closed down all the banks throughout the nation for an entire week, from March 6 to 13, with many banks remaining closed even longer.8 It was a final stroke of irony that Roosevelt s only semblance of legal ground for this decree was the Trading with the Enemy Act of World War I! Restrictions against so-called hoarding were continued afterward, and much hoarded gold returned to the banks following a Federal Reserve threat to publish a list, for full public scorn, of the leading gold hoarders. 9 It soon became clear that, with the advent of the Roosevelt admin- istration, the American gold standard was doomed. There have been a great many recriminations, particularly from the Hoover camp, about Roosevelt s failure to cooperate, when he was President-elect, in solving the banking crisis. Certainly it is true that fear of Roosevelt s impending monetary radicalism, and Senator Glass s investigations forcing Charles E. Mitchell to resign as President of the National City Bank, contributed to the banking 7 [ Pobierz całość w formacie PDF ] |
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