Full text of District Notices (Federal Reserve Bank of Dallas) : Copy of a Letter From Senator Glass to Wagner, Copy of a Letter From D. W. Bell to Spence

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Federal

reserve bank

OF DALLAS

Dallas, Texas, February 11, 1944

T o A l l B a n k i n g I n s t i t u t i o n s in t h e
E le v e n th F e d e r a l R e se r v e D is t r ic t :

In view of the current interest in the subject, there are
enclosed for your information a copy of a letter from Senator
Carter Glass to the Honorable Robert F. Wagner, Chairman
of the Senate Banking and Currency Committee, and a copy
of a letter from Mr. D. W. Bell, Acting Secretary of the Treas­
ury, to the Honorable Brent Spence, Chairman of the Banking
and Currency Committee of the House of Representatives.

Yours very truly,
R. R. GILBERT
President

■IWICTORY
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B
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STATE*

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BO N D S
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STAMPS

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

February 1, 1944

My dear Senator Wagner:
My attention has been called to S. 1642, introduced by Mr. Maybank,
and a companion bill in the House, H. R. 3956. This proposed legislation,
in my judgment, would entirely emasculate the statute prohibiting the
payment of interest by banks on demand deposits which, you will remem­
ber, I fought for and obtained in the Banking Act of 1933. Senator
Maybank’s bill would authorize member banks to pay interest by absorbing
exchange charges made by a comparatively small group of banks which do
not pay their checks at par. Member banks of the Federal Reserve System
cannot even make these charges nor do the nonmember banks who partici­
pate in the par clearance system.
The bill is rankly discriminatory and lacking in frankness. Its enact­
ment could have vicious and far-reaching effects upon the Federal Reserve
System, both in the number of member banks and in the perpetuation of
a par clearance system which has saved the Nation’s industry, commerce
and agriculture millions upon millions of dollars. I am unalterably opposed
to the bill.
Sincerely yours,
(Signed) Carter Glass
Hon. Robert F. Wagner, Chairman,
Senate Banking and Currency Committee,
Senate Office Building,
Washington, D. C.

January 29, 1944

Dear Mr. Spence:

This will acknowledge receipt of the letter of January 17 from your
Committee asking for the views of the Comptroller of the Currency and
the Treasury Department on H. R. 3956.
The statutory prohibition against payment of interest on demand
deposits is a wise provision. To exempt from that prohibition the payment
of interest when in the form of absorption of exchange charges, as pro­
posed in this bill, would intensify the abuses which have developed in over­
competition for correspondent bank balances. It would, moreover, further
discriminate against small national banks which, under the law, as com­
pulsory members of the Federal Reserve System are prohibited from mak­
ing such charges on the great majority of their checks which are cleared
through the Federal Reserve banks. Legislative approval of exchange
absorption, such as is contained in this measure, is not, therefore, in the
interest of sound banking.
It is our opinion that the bill should not be enacted.
No commitment can be made at this time as to the relationship of
H. R. 3956 to the program of the President.
Very truly yours,
(Signed) D. W. Bell
Acting Secretary of the Treasury
Honorable Brent Spence,
Chairman, Banking and Currency Committee,
House of Representatives,
Washington, D. C.