Business: Breathing Spell

The Federal Reserve Bank Building in Manhattan is particular about its tenants. Brokerage firms or other private financial companies are unwelcome. Two weeks ago the tenants, all on the fifth floor, consisted of two insurance agencies, an architect, a management company, and the offices of the national bank examiners and the New York State Bankers Association. To these was added last week National Credit Corp. which took space on the sixth floor occupied in part last year by New York Telephone Co. Driven rapidly forward by the Corporation’s president, Mortimer Norton Buckner, things soon hummed on the Reserve building’s sixth floor.

This central office will be much like the Federal Reserve System headquarters in Washington. Here will be held the meetings of the twelve directors, one from each Reserve district. There will be no safe holding one billion dollars, only a clerical staff with ample filing space to record the decisions and transactions of National Credit Corp.’s twelve divisions throughout the land. Important in the personnel will be the telephone operators, for through their plugs and switches will flow almost all the office’s activity, mostly long distance. And most familiar to the telephone operators will be the voice of Banker Buckner who stayed at the office after midnights last week galvanizing the biggest corporation ever formed on such short notice.

The New York office will be the eyes, ears and brain of National Credit Corp. Its many fingers, long enough to reach any bank in the country, are National Credit Associations set up in subdivisions of the twelve Reserve districts, each presided over by a local chairman. (Federal Reserve District No. 2, comprising New York State and parts of New Jersey and Connecticut, has 13 Associations.) Members of each Association will collectively stand back of all loans made in their district. National Credit Corp. thus divided becomes responsibly mobile, its loans in any district authorized only by those who know local conditions thoroughly.

Subscriptions to the Corporation’s 6% gold notes continued to be received last week. George McClelland Reynolds of Chicago, national chairman, announced:

“In a few days the National Credit Corporation will be ready to make loans. Of course we will not have all the subscriptions in by that time, but we will have enough to start doing business. . . . Everything is developing as rapidly as could be expected.”

Officials of National Credit Corp. were disturbed by a report that New York banks which had advanced money to assist nearby banks in the last few weeks would shift these loans to National Credit Corp. (TIME, Oct. 26). This was denied. No such transactions are contemplated under the proposed plans.

Meanwhile, almost on its second birthday, the U. S. Depression showed signs of waning. Nobody said Depression was over, but in high places events were taken to show that it had been checked. Business took a deep breath, felt a little better.

At the White House President Hoover commented upon a number of things which pleased him. The Federal Reserve System ratio of reserves to deposits and notes remained unchanged for the week at 59.9%. Currency in circulation decreased $24,000,000, showed hoarding less popular. Wheat was up 20¢ from its low; cotton advanced $6 a bale. Appearing in Washington before the Senate Committee on Manufactures, New York’s important Banker Albert Henry Wiggin (Chase National) was questioned by young Senator Robert Marion La Follette Jr.

Testimony was being taken to determine whether some government agency could be by Congress to prevent future Depressions, something in the nature of a national economic council. Banker Wiggin, questioned on this said. “I don’t think so. A man only lives so many years and his experience only lasts with him so many years. New generations succeed and they will make the same blunders. … I don’t think an economic council would do any harm, but I don’t think it would do much good.”

“Is not yours a counsel of despair?” asked the Senator.

“I think you are looking for a super-man,” replied the Banker. “There isn’t any. Once in so many years we are going to have hard times.” For the present Banker Wiggin said he saw a “substantial improvement” in U. S. business, urged “a liberalizing of the Sherman Act” as a helpful move.

Testifying before the same Committee were James Augustine Farrell. president of U. S. Steel Corp. and Eugene Meyer, governor of the Federal Reserve Board. Steelman Farrell said there were unmistakable signs of recovery in his business, added that “foreign trade is going to be the great balance wheel of our country.” (Steel operations for the country as a whole increased last week to 29% of capacity, against 28%, the week before.) Banker Meyer was skeptical of the Swope plan for U. S. trade associations (TIME, Sept. 28), joined Messrs. Wiggin and Farrell in cold shouldering the La Follette-sponsored National Economic Council. “The voice of warning,” said he, “is the most inarticulate voice in America.”

The National Association of Manufacturers added weight to the optimistic side by publishing its annual trade survey. Questionnaires had been sent to companies in more than 20 industries. Of 800 replies received, 58% pointed to busy winter prospects; 54%, of the responding concerns had either maintained or raised the wage scale. Eight industries actually showed gains over 1930. These were automobile accessories 14%, chemicals 11%, electrical 18%,, leather 27%, paper & pulp 14%, rubber 25%, stationery & printing 9%,, textiles 17%, miscellaneous 9%.