The Bismarck Tribune Newspaper, December 5, 1934, Page 2

ECONOMIST CLEARS Pardon Appeals in ‘Torture Robbery’ UP FALLACIES ON BANKING METHODS No Magical Process of Credit Manufacture Possible; Loans on Reserves Only By EWARD T. CROWDER, Jr. Department of Economics New York Universtiy The current discussion of bank credit expansior. as a means of induc- ing business recovery lends particular interest in the old problem of just how much a banker can lend on the basis of a given amount of reserve (which ‘word we may use in the sense of cash or its equivalent, on hand or deposited in other banks). On this matter there as still a rather wide misconception, partly due, no doubt, to certain mis- leading facts concerning bank loans. ‘Thus it is widely known that when a banker makes a loan he customarily credits the borrower's account with a “deposit”; it is widely known also that ‘both the loans and the deposits of a bank tend to be much larger than the reserve. It is not surprising, then, that many persons should conclude ‘that on the basis of a given small re- serve the banker can make loans and create deposits up to an amount many times this reserve. Such a conclu- sion seems to find support in the fact ‘that, together, all the banks may have deposits many times the total of cur- rency actually in existence. It is the purpose of this article to show that no such magical process of credit manu- facture is possible—that, as a rule, a ‘yank can lend money only slightly more than the amount of its excess reserves (those not required to be kept ®s a safeguard to depositors). ‘When Loans Are Made This may be seen by considering briefly just what happens when a loan is made. It is true that the banker seldom immediately gives the borrow- er a roll of bills, but instead credits his account with the amount of the Joan. The net effect, however, js vety much as though cash had been paid out, for naturally the borrower promptly checks against his borrowed “deposit,” and he may be expected, on the average, during the period of his Joan, to use the bulk of his borrow- amgs. The banker may thus safely make loans and “create” deposits only if he has excess reserves, which he is to lose when the borrowers’ checks come in for payment, to an amount nearly as large as the loans. A certain small amount of each loan does, on the average, remain on de- posit, unused, allowing the banker safely to make loans somewhat larger than the amount of cash which he is Prepared to lose. It has been estimat- ed that normally the average unused balance will not exceed 20 per cent of the loan. If we use this figure, the banker can lend about one-fourth again as much as he could actually Pay out in cash. Finally, it must be that not all the cash which the bank receives can be paid out. The banker must keep a reserve of approximately 10 per cent on the average against deposits payable on demand, including the small amount of deposits which will remain from the Give State Board North Dakote’s state pardon board was faced with a task of Solomon—that of determining which of three claimants to inno- cence is free of the crime for which they were convicted. Before the board are three applications for absolute pardon for the same crime for which the three were convicted at different times—the “torture robbery” of McHenry county. Arthur Zimmerman, convicted originally of fivst degree robbery in connection with the case, in January, 1930, is asking a full and complete pardon, asserting his innocence. Zimmerman was sentenced to serve 20 years. Fol- lowing his conviction, Harold Hazen was arrested, confessed taking part in the crime, but ab- solved Zimmerman, according to prison records. Hazen’s confession implicated two brothers—Clifford Johnson and Arthur J. Johnson. Hazen was convicted and sen- tenced to 2 to 12 years in prison for the same crime, July 22, 1933. Later the two Johnsons were ar- rested and convicted. Arthur was tions which it imposes on him? In- deed there is such justification in the peculiar relation of the banker to his depositors. For the banker lends out the money which the depositors have brought in. Even though he receives valuable notes in return, still he has allowed borrowers to use funds which he has promised to pay on demand to the depositors. Normally they will not ask for payment all at once, but if they should the banker could not im- mediately pay them. The public has, in the interest of the great number of depositors, a legitimate concern in the proper conduct of banking. This public concern does not depend upon the erroneous notion of the banker's Fower of credit manufacture, and the discarding of this fallacy should serve to clarify the really serious banking problems confronting us. People’s Forum (Editor’s Note)—The Tribune wel- comes letters on subjects of inter- est. Letters dealing with contro- versial religious subjects, which attack Individuals unfairly, | or which offend good taste and fair play will be returned.to the write ers, All letters MUST bo signed. If you wish to use a pseudonym, sign the pseudonym first and your own name beneath it. We will re- spect such requests, We reserve the right to delete such parts of letters as may be necessary to conform to this policy and to re- quire publication of a writer's name where justice and fair play make it advisable, FAVORS PENSION FOR AGED Bismarck, N. D. Dec. 3, 1934, Editor, Tribune: It was with much interest we read the recent letter in the Public Forum written by Sherman Hickle, Mr. Hickle takes the stand that the for- mer service man is more entitled to ® pension than is the person who has nothing but old age to recommend him. But, why raise any distinctions when the two cases are 50 at vari- ance? They have absolutely nothing in common, are as far apart .as the North and South poles, Those advocating an old age pen- sion are not asking this law at the ‘unused, we should arrive at a figure around $110. Thus a given increase in @ bank’s deposits allows the banker ‘to expand his loans by an amount only dy larger than this increase. how this would work out The bank receives the and makes a loan of $110. this amount appears as a 80 per cent of it, or $88, average be withdrawn of the loan, leaving average balance. of $88 reduces the cash to leaves as @ reserve the amount — approxi- 10 per cent on the aver original $100 deposit plus posit remaining from the ary It is now possible to explain, with- out resorting to any magical theory of credit expansion, why loans and deposits are found to be so much lar- ger than reserves. It is seen that the Zemaining reserve of $12 in the above illustration is only a traction of either the deposits or the loans. But surely nothing remarkable about bag? $12 is the cash left over af- age mil i 8 ait & ! i i ft. F expense of the former service man. Surely we can afford both if we once set our minds to it, and those spon- soring both measures can well afford to work in harmony and not against one another. The ex-soldier has richly earned his bonus, and we believe the average citizen past 60 years old, also richly deserves con- sideration by his government. We cannot all fight on the battle- field. Some of us must “carry on” at home. We must keep the home The|fires burning and the lights along the shore trimmed and burning brightly. We must raise the food that sustains our fighting men while they are protecting our country and its flag. Shall we say then, that every soldier is worthy who served his country well, or shall we put a Price on patriotism? Soldiers of fortune can be as brave as soldiers of war. And, while war ends, those who fight day in and day out in the daily battle for ex- istence are sure to find that the strug- gle endures as long as life itself. ‘The mere fact that we are giving some consideration to the problem of old age pensions proves that at. last we are becoming at least partly Civilized. The United States today stands almost alone in its attitude to its old people. Other countries their aged citizens, while we have charity and the poorhouse. Who of us has not, at one time or another, thought of old age with a shiver of dread and repulsion? Who of us wants to grow old? Is not much of this dread and repulsion due to the fact that so few of us have been able to save the necessary money to care for ourselves when we are no longer Y:lable to work? Old age, in itself, is not ugly or repulsive. It should mean the glorious harvest time of life when ¢|the golden sheaves have been gath- ered and stored away, the work over, FE ee F3 if CBs and a resting period given a few years eae We take flight for our eternal e. But to how many of us will come this peaceful season of contentment and rest unless something is done in time? Look on the average old citizen of North Dakota today. Aye, even though he may have been able to F i a ge 4 a | i 5 & Z ? i af zi - save enough to care for his old bank failures by the score have ped him fully as destitute as those who saved nothing. Then there is something else. No one who does not know the actual THE BISMARCK TRIBUNE, WEDNESDAY, DECEMBER 5, 1934 Puzzling Problem sentenced to five to eight years, while Clifford received an eight to 15 years sentence in December, 1933, Shortly after their conviction, the two Johnsons asserted their innocence. At their.pardon hear- ing Wednesday, one of the vic- tims of the robbery appeared be- fore the board, telling the mem- bers neither of the two brothers was at the scene of the robbery. The boys’ mother told the board they had been at their home at a time which was & short time before the robbery. The board, faced with the pic- ture of three men demanding complete pardon on the plea of innocence, ordered a complete in- vestigation to be made. Action on the case was deferred. William Gummer, convicted of murder at Fargo, appealed to the board for commutation or pardon. The board continued the case. Gummer was convicted of the murder of Marie Wick. He has been in prison sinco 1922. Eighteen cases were disposed of by the board, bringing the total heard to 43, of the 177 scheduled on the calendar. anything that would force them to become direct competitors of those who backed no pension. In the first place the pension was granted so they could quit work and let some younger person take their place, Sometimes we think that if there could only be @ way by which we could remove the old people from in- terfering in our national affairs we would be a lot better off. Did you ever stop to think that the great world war was planned and carried out by old people? How many of them are still with us? Practically every man who ruled his country then is dead and gone. But we are still paying for their mistakes and must continue paying for years. If we could pension every old per- son and remove them and their in- fluence from our affairs we believe there would be less talk of war and more moves toward pace. And by that we do not mean to infer old folks are trobule makers but it has always been so that youth is liberal and age conservative and it appears more and more that this is the age of youth and high ideals for the fu- ture, and not of old age and its ever turning to the past. Today we are spending millions of dollars on various relief projects, not one of which would continue day were government relief funds re- moved. We have been doing this for months, and this will have to continue indefinitely the way it looks at the present time. We continually find fault with private industry for not employing more men while all the time we are not putting the necessary funds in the hands of the people with which to purchase what industry has already provided. ‘We have forced the farmer to cur- tail production and we are paying him millions of dollars for restrict- ing his acreage. We must also re- move millions from the pay roll be- fore we can put everybody to work, queer as it sounds. We can only do this by pensioning off those who have grown old in years as well as in ser- vice. Mr. Hickle says that before long those advocating the old age pensions under the Townsend plan will want to set the age at 50 or even less. Has not private industry set such an ex- ample? How true it is that a man past 50 is not wanted in many es- ‘tablishments because of his age, and as for the man past 60, who will give him employment? The average age of the American gangster and racketeer is below 22. We are spending millions of dollars to curb crime, but, while we have so many unemployed .among our younger people we cannot stem the tide of crime. They take to wrong- doing as @ duck takes to water. It seems to us that the time has come for us to ask ourselves in sincerity whether the Townsend or one similar to it, should not enacted into law even though it nothing else but offer employme: steady employment, than ters continue as they are have for years made provision for| younger ets. Shem. $0, the ‘tender’ mercy off ment with children’s colds... Treat them as your own mother did— externally. No dos- ing! Just rub throat and chest with... Vicks ROVED BY e Pipe, fittings, valves, enam- eled ware, plumbing and heating specialties—call on Frank G. Grambs Co. : Behind Rear 112 st. N. D. SCHEDULE MATINE OF H. §. OPERETTA ‘Melinka of Astrakhan’ Will Be Given at 4 and 8:15 P. M. Friday A matinee performance of the high school operetta, “Melinks of Astrak- han,” will be given at 4 o'clock Fri- day afternoon at the Bismarck city auditorium, according to Clarion E. Larson, in charge of ticket sales for the production, The matinee primarily is intended for grade school children, who will be admitted for a nominal sum. Adults who wish to attend the ma- tinee may do so. A reduced rate will be given to school pupils at the eve- ning performance the same day, which will start at 8:15 o'clock, Scenes of the operetta are laid in Russia, Fort Astrakhan is placed in General Ivanott, folowing wager or a with her father’ that "women can manage and defend the fort as well as men. If Melinka succeeds she is she fails, she must marry Captain Michael Arensky. With the dppear- ance of salesmen, @ Bolshevik and a spy, Melinka has many difficulties but with the aid of her friends brings everything to a happy conclusion. Members chosen from the high to receive a trip to America but, if|: Four Additional Feed Meetings Scheduled Schedules for four more feed schools for Burleigh county farmers were announced Tuesday by Martin C. Altenburg, assistant county agent. The first meeting will be held at 2 p.m, Friday at Baldwin for farm- ers of Glenview and Crofte town- ships, The second will be held at 3 DP. m, Saturday at the World War Memorial building, Bismarck, for farmers of Hay Creek, Lincoln, Ap- ple Creek, Gibbs, Riverview, Naughton ‘and Burnt Creek townships. At 3 p. m., Monday of next week meetings will be held at the Frances township achool and the Manning school, No. 1 in Missouri township. Cromwell, Trygg, Frances, and Sib- ley Butte township farmers will at- tend the meeting at the Frances school while cattle raisers in Fort Rice, Missouri and Telfer townships will meet at the Manning school. REPORT RIGH GOLD STRIKE IN CALIF. Discovery Made by George Holmes on Claim in Vicin- ity of Mojave Los Angeles, Dec. 5—(?)}—The Times says one of the richest gold and silver strikes since Goldfield and Tonopah, Nev., in the early 1900's has been discovered in the vicinity school orchestra to accompany the soloists and choruses have been an- nounced by Larson. They include Walter Zimmerman, Frances Frahm, Asle Lewis, Lucile Tovaas and Audrey Betterly, violins; Margaret Betterly, Grace Erickson and Henrietta Ode, clarinets; Bruce Herman, cor- net; Eugene Fevold, horn; Robert Kling and Austin Cummings, trom- bones; Mary Louise Finney, flute; Clark Swick, drums. Miss Marguer- east is the plano accompan- of Mojave, Calif. ‘The original strike, the Times says, was made by George Holmes, 32-year- old former University of Southern California student. Gold fields in South Africa is re- ported by the newspaper to have INDUSTRY CONGRESS TO BACK U. §. PLANS ‘Whole-Hearted’ Cooperation With Government Promised in Opening Session New York, Dec. 5—(#)—Industry’s “whole-hearted” cooperation with the government to drive business dol- drums out of the country was pledged Wednesday by C. L. Bardo, president | of the National Association of Manu- facturers, in opening a two-day con- gress of American industry. “Industry's prompt cooperation with government,” he said, “has been whole-hearted. Industry will con- tinue to cooperate to restore sound economic conditions and to place the millions now idle back at work in private enterprise at the earliest prac- tical date.” The congress, made up of leaders of industry from coast to coast, met to consider a proposed platform for recovery, written by a committee of industrialists and approved tenta- tively by the national industrial coun- cil in a meeting preliminary to that of the congress, The platform is designed, said Bardo in his address to the congress, “to permit constructive cooperation of our own and other industrial or- ganizations in producing a national solidified industrial opinion involv- ing further cooperation with govern- ment, agriculture, labor, congress and the states in developing a sound na- tional industrial economy.” Of the NRA, he said: “We must correct the evil withdut destroying the good.” “President Roosevelt,” Bardo said, “has met grave conditions with cour- age and determination.” taken an option on 36 acres of the Holmes claim for a reported $3,500,000. Holmes and his father are said by the newspaper to own 60 per cent of the claim, known as the New Silver Queen. It is about seven miles from Mojave. y Legionnaires Honor National Executive John K. Kennelly, Mandan, re- cently named national vice comman- der of the American Legion, was REPORT AS OF OCTOBER 17, 1934, OF CORPORATIONS WHICH, UNDER THE TERMS OF THE BANKING ACT OF 1933, ARE AFFILIATES OR HOLDING . DAKOTA NATIONAL BANK et Bismarck, Charter No. 18308 #e COMPANY AFFILIATES OF jakota & TRUST Co. Federal Reserve District No. 9 BY REASON OF COMMON OWNERSHIP CR CONTROL DIRECTLY OR INDIRECTLY ' re VESTED IN NORTHWEST BANCORPORATION OR THROUGH INTER-LOCKING DIRECTORS (Tats report to mate tm compliance with the requirements of the Banking Act of 1903) —— rs Name, Address and Punction ef Bustnesg AUSTIN STA’ TATE BANK, Austtn, Minnesota i af 5 Bee & ing i 2 i i : i ft id fete MORRISON COUNTY BANE, DODGE CENTER STATE BANK, Dodge Ovater, Maa. DANE OV ELI RIVER, Hit River, Minn, STATE BANK OF LAE PARK, Labe Park, Bina, AD BE. & TR. OO.. Laneshoro, SCANLAN-HABBERST, ‘Minn.—General cone ‘and Trust Business ence Banking SECOND N. W. STATE BANE, Minneapolis, tna. Geueral Banking UNION STATE BANE, Monteviden, stanesote STATE BANK OP NORTHFIELD, Northfield, Mun, General Banking NORTHWESTERN STATE BANE, Ortonville, Mian. \TE General PURER EREEE ANT. Ooe tte REELS STWORT Gy crs te AGAICI ESTATE BANE, Richeend, atteacesta OO RSET Recking ore Te SAME, Ot: Peat, Men. apenas ‘STATE BANK, Slayton, Minn. vi : ee ee raTe Bale, PEOPLES STATE BANK, Warren, Minnesota “LENE RTE, eee pene Tm: Beetle, Bm, eral mantles OF ORRDORY, Cevemrs, ‘BANK OF SPRARFISH, Sprerish, South Dakota bee RAWK, Feok, Monies: a NORTHWESTERN BANK & TRUST 00., Lewistown, ‘Mont.—Gereral Banking and Trust Business WIGS STATE BANE, Malte, eatens MANEATTAN STATE BAME, Menbatten, Montenn ‘BANK OF MILES CITY, Miles Otty, Montana MRERE (MERCHANTS BANE, Roundup, Sfentene Soot age inn teen BERLIN STATE BARE, Bertio, Wheeensta PORTE EE SAvmOs BANE, atnoen Coty, Dove STATE BANK, Nortotk, Webrasts SOUTH SAVINGS BANE, Omaha, Welerastas INSURANCE AGENCY, Parteutt, ition. Agency ‘MPINEATOLIS MATL CO., Mtanenpotts, sian, NORTHWESTERN MOR? Minneapetia, Grin Handles Weal uetate te Sancrance AXERICAN MATL INSURANCE AGENT, Valter Cty, WATE BANE CO., (Senalee neal netuts a Opecores Bonk Beticong WIRST NATIONAL AGENCY, Watertown, 8. D. ‘FIRST wa’ wi TIONAL WAREROUSE OO.. Dien, Ment, Pritit ahaa reports « PURUUUODORORDOUCOOROROROCORORORODOSOSOSUSESECUSSSEERSROSOSOSOSCEOESES PUCCCC COC UC TEED ECT OE TC ECOE CECE 2 allgse rm ps EEE. ce TERED EE EE UD CODER CECE EEE COE EERE eRe e ihren ) SECCRRRRSOCCCEOE SE BL: PECETEEEEEEEEEE EER EEL EEE EEE EEE EEE EEE EE ERD RCORROREUOEUSORCOEROLEOCOOCCOCORCEOOCEOCSCOSES | eEEEOUEEE EEL EEE CELE CECE ECE OE OOOO cee URUURAODEOOSSOUSDOUSEIODSSOOESEOEOSSSSOLSECOOSSESOEOSSSOEOOSSELO008: PEEETEGEEETEE OEE E ei SSA ESE stow uw wee bor = Wetman, honored here Tuesday night at a re-| trict. Jack Williams, state adjutant; ception and dance attended by sev-|T. O, Kraabel, vetera a Legion post sponsored |erans’ administration mana; all of the reception at’ which the national| Fargo, came here for the Terepised: vice commander's badge was pre-| Edward Tobin of sented to’ Kennelly, Legionnaires were here from Man- dan, New Salem, Hebron, Beulah and Manning, Dickinson, na- Committee member, other communities in the seventh dis- BALD-NO-MORE Pigg FINNEY’S DRUG STORE ‘Two Days Only + FRIDAY and SATURDAY Conoco Bronze Gasoline gives instant starting in the coldest weather— | and extra mileage, ’ power and anti-knock all the time... . Also Conoco Germ Processed Paraffin Base Motor Oil is a real winter protec- tion... . the sure pene- trative “Hidden Quart.” CENTURY FILLING STATION Main and Broadway Stations 8 8 8 8 @ Smee Sixth Street Between M. B. GILMAN COMPANY, INC. ¢ Broadway at Second ; REFILL YOUR CAR NOW at any one of these stations CHRISTMAS urkeys Armour Creameries will buy turkeys for the Christmas period from Dec. 3 to Dec. 10 CASH ADVANCE No. 1 Young Toms No. 1 Young Hens Choice Young Hens and No. 1 Old Toms - No. 1 Old Hens - No. 2 Turx Listen to Our Broadcasts, 5:35 C. 8. T, over KFYR ns 12¢ ee = es @ @ We would that our patrons hold beck such of their Sreetee ies Same nee or February buying dates, oe Armour Creameries BISMARCK, N. D.